Yahoo Finance Is Technology One Limited's (ASX:TNE) CEO Pay Justified?
In 2017 Edward Chung was appointed CEO of Technology One Limited (ASX:TNE). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Technology One
How Does Edward Chung's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Technology One Limited has a market cap of AU$2.8b, and reported total annual CEO compensation of AU$1.4m for the year to September 2018. While we always look at total compensation first, we note that the salary component is less, at AU$503k. 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 looked at a group of companies with market capitalizations from AU$1.5b to AU$4.7b, and the median CEO total compensation was AU$2.0m.
A first glance this seems like a real positive for shareholders, since Edward Chung is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Technology One has changed from year to year.
Is Technology One Limited Growing?
Over the last three years Technology One Limited has grown its earnings per share (EPS) by an average of 8.0% per year (using a line of best fit). It achieved revenue growth of 13% over the last year.
I would argue that the modest growth in revenue is a notable positive. And the improvement in earnings per share is modest but respectable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. You might want to check this free visual report on analyst forecasts for future earnings.
Has Technology One Limited Been A Good Investment?
Boasting a total shareholder return of 75% over three years, Technology One Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
Technology One Limited is currently paying its CEO below what is normal for companies of its size.
Edward Chung receives relatively low remuneration compared to similar sized companies. And the returns to shareholders were great, over the last few years. Although we could see higher growth, we'd argue the remuneration is modest, based on these observations. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Technology One (free visualization of insider trades).
If you want to buy a stock that is better than Technology One, this free list of high return, low debt companies is a great place to look.
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.
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