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Peter Cook became the CEO of Novatti Group Limited (ASX:NOV) in 2002, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Novatti Group.
How Does Total Compensation For Peter Cook Compare With Other Companies In The Industry?
At the time of writing, our data shows that Novatti Group Limited has a market capitalization of AU$59m, and reported total annual CEO compensation of AU$698k for the year to June 2020. We note that's an increase of 22% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$286k.
For comparison, other companies in the industry with market capitalizations below AU$276m, reported a median total CEO compensation of AU$344k. Hence, we can conclude that Peter Cook is remunerated higher than the industry median.
Talking in terms of the industry, salary represented approximately 59% of total compensation out of all the companies we analyzed, while other remuneration made up 41% of the pie. In Novatti Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Novatti Group Limited's Growth Numbers
Over the last three years, Novatti Group Limited has shrunk its earnings per share by 26% per year. It achieved revenue growth of 33% over the last year.
Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Novatti Group Limited Been A Good Investment?
Given the total shareholder loss of 28% over three years, many shareholders in Novatti Group Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, Novatti Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Meanwhile, the company has been unable to show any EPS growth, and shareholder returns are also in the red. In contrast, revenue growth for the company has been showing a positive trend. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 2 which are potentially serious) in Novatti Group we think you should know about.
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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