Yahoo Finance We Think Integrated Research Limited's (ASX:IRI) CEO Compensation Package Needs To Be Put Under A Microscope
Key Insights
Integrated Research to hold its Annual General Meeting on 21st of November
Salary of AU$557.7k is part of CEO John Ruthven's total remuneration
The overall pay is 143% above the industry average
Integrated Research's EPS declined by 109% over the past three years while total shareholder loss over the past three years was 91%
The results at Integrated Research Limited (ASX:IRI) have been quite disappointing recently and CEO John Ruthven bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 21st of November. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.
View our latest analysis for Integrated Research
Comparing Integrated Research Limited's CEO Compensation With The Industry
At the time of writing, our data shows that Integrated Research Limited has a market capitalization of AU$55m, and reported total annual CEO compensation of AU$1.2m for the year to June 2023. Notably, that's an increase of 18% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$558k.
On comparing similar-sized companies in the Australian Software industry with market capitalizations below AU$306m, we found that the median total CEO compensation was AU$502k. Accordingly, our analysis reveals that Integrated Research Limited pays John Ruthven north of the industry median.
Component | 2023 | 2022 | Proportion (2023) |
Salary | AU$558k | AU$559k | 46% |
Other | AU$663k | AU$479k | 54% |
Total Compensation | AU$1.2m | AU$1.0m | 100% |
On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. Integrated Research pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Integrated Research Limited's Growth
Over the last three years, Integrated Research Limited has shrunk its earnings per share by 109% per year. In the last year, its revenue is up 11%.
Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Integrated Research Limited Been A Good Investment?
With a total shareholder return of -91% over three years, Integrated Research Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Integrated Research that investors should look into moving forward.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.
