Yahoo Finance What Can We Make Of Good Drinks Australia's (ASX:GDA) CEO Compensation?
John Hoedemaker became the CEO of Good Drinks Australia Ltd (ASX:GDA) in 2011, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Good Drinks Australia pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Good Drinks Australia
Comparing Good Drinks Australia Ltd's CEO Compensation With the industry
At the time of writing, our data shows that Good Drinks Australia Ltd has a market capitalization of AU$94m, and reported total annual CEO compensation of AU$478k for the year to June 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of AU$370.5k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below AU$257m, reported a median total CEO compensation of AU$478k. This suggests that Good Drinks Australia remunerates its CEO largely in line with the industry average. What's more, John Hoedemaker holds AU$4.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$371k | AU$390k | 78% |
Other | AU$107k | AU$86k | 22% |
Total Compensation | AU$478k | AU$476k | 100% |
On an industry level, roughly 54% of total compensation represents salary and 46% is other remuneration. Good Drinks Australia is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Good Drinks Australia Ltd's Growth Numbers
Good Drinks Australia Ltd has reduced its earnings per share by 45% a year over the last three years. Its revenue is down 6.3% over the previous year.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Good Drinks Australia Ltd Been A Good Investment?
Given the total shareholder loss of 22% over three years, many shareholders in Good Drinks Australia Ltd are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
As we touched on above, Good Drinks Australia Ltd is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, EPS growth and total shareholder return have been negative for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 3 warning signs for Good Drinks Australia that you should be aware of before investing.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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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