Yahoo Finance Most Shareholders Will Probably Find That The Compensation For 8common Limited's (ASX:8CO) CEO Is Reasonable
Key Insights
8common to hold its Annual General Meeting on 2nd of November
Total pay for CEO Andrew Bond includes AU$213.6k salary
Total compensation is 50% below industry average
8common's three-year loss to shareholders was 39% while its EPS was down 38% over the past three years
Performance at 8common Limited (ASX:8CO) has been rather uninspiring recently and shareholders may be wondering how CEO Andrew Bond plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 2nd of November. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.
See our latest analysis for 8common
Comparing 8common Limited's CEO Compensation With The Industry
At the time of writing, our data shows that 8common Limited has a market capitalization of AU$16m, and reported total annual CEO compensation of AU$259k for the year to June 2023. That is, the compensation was roughly the same as last year. Notably, the salary which is AU$213.6k, represents most of the total compensation being paid.
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. In other words, 8common pays its CEO lower than the industry median.
Component | 2023 | 2022 | Proportion (2023) |
Salary | AU$214k | AU$207k | 82% |
Other | AU$46k | AU$45k | 18% |
Total Compensation | AU$259k | AU$252k | 100% |
On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. It's interesting to note that 8common pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at 8common Limited's Growth Numbers
Over the last three years, 8common Limited has shrunk its earnings per share by 38% per year. It achieved revenue growth of 58% over the last year.
The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one 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 8common Limited Been A Good Investment?
With a total shareholder return of -39% over three years, 8common Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
The loss to shareholders over the past three years is certainly concerning. The downward trend in share price performance may be attributable to the the fact that earnings growth has gone backwards. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for 8common (3 shouldn't be ignored!) that you should be aware of before investing here.
Important note: 8common 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.
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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.
