Yahoo Finance Here's Why We Think IODM Limited's (ASX:IOD) CEO Compensation Looks Fair for the time being
Key Insights
IODM will host its Annual General Meeting on 2nd of November
CEO Mark Reilly's total compensation includes salary of AU$248.9k
Total compensation is similar to the industry average
IODM's EPS declined by 1.0% over the past three years while total shareholder return over the past three years was 52%
Under the guidance of CEO Mark Reilly, IODM Limited (ASX:IOD) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 2nd of November. We present our case of why we think CEO compensation looks fair.
See our latest analysis for IODM
Comparing IODM Limited's CEO Compensation With The Industry
Our data indicates that IODM Limited has a market capitalization of AU$149m, and total annual CEO compensation was reported as AU$480k for the year to June 2023. We note that's a decrease of 15% compared to last year. We note that the salary of AU$248.9k makes up a sizeable portion of the total compensation received by the CEO.
In comparison with other companies in the Australian Software industry with market capitalizations under AU$315m, the reported median total CEO compensation was AU$519k. This suggests that IODM remunerates its CEO largely in line with the industry average. Moreover, Mark Reilly also holds AU$7.6m worth of IODM stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | AU$249k | AU$246k | 52% |
Other | AU$231k | AU$316k | 48% |
Total Compensation | AU$480k | AU$562k | 100% |
On an industry level, roughly 59% of total compensation represents salary and 41% is other remuneration. It's interesting to note that IODM allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at IODM Limited's Growth Numbers
IODM Limited saw earnings per share stay pretty flat over the last three years. Its revenue is up 27% over the last year.
The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 IODM Limited Been A Good Investment?
Most shareholders would probably be pleased with IODM Limited for providing a total return of 52% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
To Conclude...
Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 5 warning signs (and 3 which are significant) in IODM 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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
