How Is Isentia Group's (ASX:ISD) CEO Paid Relative To Peers?
This article will reflect on the compensation paid to Ed Harrison who has served as CEO of Isentia Group Limited (ASX:ISD) since 2018. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for Isentia Group
Comparing Isentia Group Limited's CEO Compensation With the industry
Our data indicates that Isentia Group Limited has a market capitalization of AU$27m, and total annual CEO compensation was reported as AU$1.2m for the year to June 2020. This means that the compensation hasn't changed much from last year. Notably, the salary which is AU$639.1k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under AU$258m, the reported median total CEO compensation was AU$321k. Hence, we can conclude that Ed Harrison is remunerated higher than the industry median. What's more, Ed Harrison holds AU$144k worth of shares in the company in their own name.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$639k | AU$591k | 53% |
Other | AU$560k | AU$616k | 47% |
Total Compensation | AU$1.2m | AU$1.2m | 100% |
On an industry level, roughly 60% of total compensation represents salary and 40% is other remuneration. In Isentia Group's case, non-salary compensation represents a greater slice of total remuneration, 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 Isentia Group Limited's Growth Numbers
Isentia Group Limited's earnings per share (EPS) grew 9.4% per year over the last three years. It saw its revenue drop 10.0% over the last year.
We would prefer it if there was revenue growth, but the modest improvement in EPS is good. 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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Isentia Group Limited Been A Good Investment?
Since shareholders would have lost about 88% over three years, some Isentia Group Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
As previously discussed, Ed is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. The growth in the business has been uninspiring, but the shareholder returns for Isentia Group have arguably been worse, over the last three years. This doesn't look good when you see that Ed is earning more than the industry median. With such poor returns, we would understand if shareholders had concerns related to the CEO's pay.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Isentia Group that investors should think about before committing capital to this stock.
Important note: Isentia 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. 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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