Australia markets open in 2 hours 16 minutes
  • ALL ORDS

    7,303.30
    -123.30 (-1.66%)
     
  • AUD/USD

    0.7049
    +0.0089 (+1.28%)
     
  • ASX 200

    7,064.50
    -118.20 (-1.65%)
     
  • OIL

    111.65
    +2.06 (+1.88%)
     
  • GOLD

    1,840.30
    +24.40 (+1.34%)
     
  • BTC-AUD

    42,942.12
    +1,193.47 (+2.86%)
     
  • CMC Crypto 200

    669.81
    +17.58 (+2.69%)
     

Increases to CEO Compensation Might Be Put On Hold For Now at Novatti Group Limited (ASX:NOV)

  • Oops!
    Something went wrong.
    Please try again later.
·3-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Performance at Novatti Group Limited (ASX:NOV) has been reasonably good and CEO Peter Cook has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 24 November 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for Novatti Group

How Does Total Compensation For Peter Cook Compare With Other Companies In The Industry?

According to our data, Novatti Group Limited has a market capitalization of AU$125m, and paid its CEO total annual compensation worth AU$801k over the year to June 2021. That's a notable increase of 15% on last year. In particular, the salary of AU$432.7k, makes up a fairly large portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below AU$273m, reported a median total CEO compensation of AU$412k. Accordingly, our analysis reveals that Novatti Group Limited pays Peter Cook north of the industry median.

Component

2021

2020

Proportion (2021)

Salary

AU$433k

AU$286k

54%

Other

AU$368k

AU$412k

46%

Total Compensation

AU$801k

AU$698k

100%

Speaking on an industry level, nearly 63% of total compensation represents salary, while the remainder of 37% is other remuneration. It's interesting to note that Novatti Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ceo-compensation

A Look at Novatti Group Limited's Growth Numbers

Novatti Group Limited has reduced its earnings per share by 33% a year over the last three years. Its revenue is up 55% over the last year.

The decrease in EPS could be a concern for some investors. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Novatti Group Limited Been A Good Investment?

Most shareholders would probably be pleased with Novatti Group Limited for providing a total return of 97% 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.

In Summary...

The overall company performance has been commendable, however there are still areas for improvement. We still think that some shareholders will be hesitant of increasing CEO pay until EPS growth improves, since they are already paid higher than the industry.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 5 warning signs for Novatti Group you should be aware of, and 2 of them are a bit unpleasant.

Important note: Novatti Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting