In 2002, Peter Cook was appointed CEO of Novatti Group Limited (ASX:NOV). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Peter Cook's Compensation Compare With Similar Sized Companies?
According to our data, Novatti Group Limited has a market capitalization of AU$32m, and paid its CEO total annual compensation worth AU$570k over the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$335k. We examined a group of similar sized companies, with market capitalizations of below AU$312m. The median CEO total compensation in that group is AU$389k.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Novatti Group stands. Talking in terms of the sector, salary represented approximately 67% of total compensation out of all the companies we analysed, while other remuneration made up 33% of the pie. Our data reveals that Novatti Group allocates salary in line with the wider market.
As you can see, Peter Cook is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Novatti Group Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. The graphic below shows how CEO compensation at Novatti Group has changed from year to year.
Is Novatti Group Limited Growing?
Novatti Group Limited has seen earnings per share (EPS) move positively by an average of 15% a year, over the last three years (using a line of best fit). Its revenue is up 26% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Novatti Group Limited Been A Good Investment?
Novatti Group Limited has generated a total shareholder return of 19% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
We compared the total CEO remuneration paid by Novatti Group Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. We also think investors are doing ok, over the same time period. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't call the CEO pay problematic. CEO compensation is an important area to keep your eyes on, but we've also identified 6 warning signs for Novatti Group (2 are concerning!) that you should be aware of before investing here.
Important note: Novatti Group may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.