Yahoo Finance What We Learned About Technology One's (ASX:TNE) CEO Pay
Edward Chung became the CEO of Technology One Limited (ASX:TNE) in 2017, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for Technology One
How Does Total Compensation For Edward Chung Compare With Other Companies In The Industry?
According to our data, Technology One Limited has a market capitalization of AU$2.6b, and paid its CEO total annual compensation worth AU$1.8m over the year to September 2020. Notably, that's an increase of 10% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$513k.
On comparing similar companies from the same industry with market caps ranging from AU$1.3b to AU$4.2b, we found that the median CEO total compensation was AU$2.8m. In other words, Technology One pays its CEO lower than the industry median. What's more, Edward Chung holds AU$6.1m 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$513k | AU$508k | 29% |
Other | AU$1.3m | AU$1.1m | 71% |
Total Compensation | AU$1.8m | AU$1.6m | 100% |
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. Technology One pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Technology One Limited's Growth Numbers
Technology One Limited's earnings per share (EPS) grew 12% per year over the last three years. Its revenue is up 4.6% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Technology One Limited Been A Good Investment?
Boasting a total shareholder return of 73% over three years, Technology One Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
As we noted earlier, Technology One pays its CEO lower than the norm for similar-sized companies belonging to the same industry. When taking into account the company's strong EPS growth over the past three years, it appears CEO compensation is modest. Given the strong history of shareholder returns, the shareholders are probably very happy with Edward's performance.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Technology One that investors should think about before committing capital to this stock.
Important note: Technology One 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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