Geoff Daly has been the CEO of Analytica Limited (ASX:ALT) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Analytica pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Analytica Limited's CEO Compensation With the industry
At the time of writing, our data shows that Analytica Limited has a market capitalization of AU$8.8m, and reported total annual CEO compensation of AU$283k for the year to June 2020. That's a modest increase of 3.3% on the prior year. We note that the salary portion, which stands at AU$258.3k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the industry with market capitalizations below AU$281m, reported a median total CEO compensation of AU$585k. This suggests that Geoff Daly is paid below the industry median.
On an industry level, around 63% of total compensation represents salary and 37% is other remuneration. It's interesting to note that Analytica pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Analytica Limited's Growth
Analytica Limited has seen its earnings per share (EPS) increase by 51% a year over the past three years. In the last year, its revenue is down 1.1%.
Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Analytica Limited Been A Good Investment?
Given the total shareholder loss of 38% over three years, many shareholders in Analytica Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we touched on above, Analytica Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However we must not forget that the EPS growth has been very strong over three years. Considering EPS are on the up, we would say Geoff is compensated fairly. But we believe shareholders would want to see healthier returns before the CEO gets a raise.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Analytica that investors should be aware of in a dynamic business environment.
Important note: Analytica 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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