Yahoo Finance Should You Be Pleased About The CEO Pay At Covata Limited's (ASX:CVT)
In 2017 Ted Pretty was appointed CEO of Covata Limited (ASX:CVT). 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 method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Covata
How Does Ted Pretty's Compensation Compare With Similar Sized Companies?
According to our data, Covata Limited has a market capitalization of AU$3.4m, and paid its CEO total annual compensation worth AU$1.1m over the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$337k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations below AU$292m, and calculated the median CEO total compensation to be AU$373k.
Thus we can conclude that Ted Pretty receives more in total compensation than the median of a group of companies in the same market, and of similar size to Covata Limited. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Covata has changed from year to year.
Is Covata Limited Growing?
Covata Limited has increased its earnings per share (EPS) by an average of 47% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 76%.
This demonstrates that the company has been improving recently. A good result. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Covata Limited Been A Good Investment?
With a three year total loss of 95%, Covata Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
We compared the total CEO remuneration paid by Covata Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. So you may want to check if insiders are buying Covata shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.
