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Why We Think Shareholders May Be Considering Bumping Up Technology One Limited's (ASX:TNE) CEO Compensation

The solid performance at Technology One Limited (ASX:TNE) has been impressive and shareholders will probably be pleased to know that CEO Edward Chung has delivered. At the upcoming AGM on 22 February 2023, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

See our latest analysis for Technology One

Comparing Technology One Limited's CEO Compensation With The Industry

According to our data, Technology One Limited has a market capitalization of AU$4.7b, and paid its CEO total annual compensation worth AU$2.3m over the year to September 2022. We note that's an increase of 18% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$513k.

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On comparing similar companies from the Australian Software industry with market caps ranging from AU$2.9b to AU$9.2b, we found that the median CEO total compensation was AU$8.4m. In other words, Technology One pays its CEO lower than the industry median. Furthermore, Edward Chung directly owns AU$13m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2022

2021

Proportion (2022)

Salary

AU$513k

AU$506k

22%

Other

AU$1.8m

AU$1.4m

78%

Total Compensation

AU$2.3m

AU$1.9m

100%

Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. Technology One sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

Technology One Limited's Growth

Technology One Limited has seen its earnings per share (EPS) increase by 14% a year over the past three years. Its revenue is up 18% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Technology One Limited Been A Good Investment?

Most shareholders would probably be pleased with Technology One Limited for providing a total return of 78% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which is potentially serious) in Technology One we think you should know about.

Important note: Technology One is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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