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Shareholders will be pleased by the robust performance of Desane Group Holdings Limited (ASX:DGH) recently and this will be kept in mind in the upcoming AGM on 28 October 2021. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.
Comparing Desane Group Holdings Limited's CEO Compensation With the industry
Our data indicates that Desane Group Holdings Limited has a market capitalization of AU$49m, and total annual CEO compensation was reported as AU$222k for the year to June 2021. We note that's a decrease of 45% compared to last year. In particular, the salary of AU$203.0k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under AU$267m, the reported median total CEO compensation was AU$510k. That is to say, Felice Montrone is paid under the industry median. What's more, Felice Montrone holds AU$17m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 73% of total compensation represents salary and 27% is other remuneration. According to our research, Desane Group Holdings has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Desane Group Holdings Limited's Growth Numbers
Desane Group Holdings Limited's earnings per share (EPS) grew 35% per year over the last three years. Its revenue is up 40% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Desane Group Holdings Limited Been A Good Investment?
With a total shareholder return of 1.3% over three years, Desane Group Holdings Limited has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.
Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 6 warning signs for Desane Group Holdings (1 is potentially serious!) that you should be aware of before investing here.
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.
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.
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