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Dan Roberts is the CEO of Scout Security Limited (ASX:SCT), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether Scout Security pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Scout Security Limited's CEO Compensation With the industry
At the time of writing, our data shows that Scout Security Limited has a market capitalization of AU$9.7m, and reported total annual CEO compensation of AU$223k for the year to June 2020. That's just a smallish increase of 6.6% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth AU$223k.
On comparing similar-sized companies in the industry with market capitalizations below AU$277m, we found that the median total CEO compensation was AU$522k. This suggests that Dan Roberts is paid below the industry median. What's more, Dan Roberts holds AU$675k worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. On a company level, Scout Security prefers to reward its CEO through a salary, opting not to pay Dan Roberts through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Scout Security Limited's Growth
Scout Security Limited has seen its earnings per share (EPS) increase by 31% a year over the past three years. In the last year, its revenue is up 7.5%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Scout Security Limited Been A Good Investment?
With a three year total loss of 55% for the shareholders, Scout Security Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
Scout Security rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we noted earlier, Scout Security pays its CEO lower than the norm for similar-sized companies belonging to the same industry. However we must not forget that the EPS growth has been very strong over three years. It's tough to criticize CEO compensation when the per-share EPS movement is positive. Shareholders, though, would ideally like to see shareholder returns head north before they agree to any raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for Scout Security (of which 2 are significant!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from Scout Security, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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