Yahoo Finance Serko Limited's (NZSE:SKO) CEO Compensation Looks Acceptable To Us And Here's Why
Despite strong share price growth of 130% for Serko Limited (NZSE:SKO) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 18 August 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.
View our latest analysis for Serko
Comparing Serko Limited's CEO Compensation With the industry
At the time of writing, our data shows that Serko Limited has a market capitalization of NZ$735m, and reported total annual CEO compensation of NZ$691k for the year to March 2021. That's a notable increase of 31% on last year. In particular, the salary of NZ$358.6k, makes up a fairly large portion of the total compensation being paid to the CEO.
On comparing similar companies from the same industry with market caps ranging from NZ$285m to NZ$1.1b, we found that the median CEO total compensation was NZ$875k. This suggests that Serko remunerates its CEO largely in line with the industry average. Moreover, Darrin Grafton also holds NZ$76m worth of Serko stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2021 | 2020 | Proportion (2021) |
Salary | NZ$359k | NZ$371k | 52% |
Other | NZ$332k | NZ$156k | 48% |
Total Compensation | NZ$691k | NZ$527k | 100% |
Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. In Serko's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Serko Limited's Growth
Over the last three years, Serko Limited has shrunk its earnings per share by 121% per year. Its revenue is down 48% over the previous year.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Serko Limited Been A Good Investment?
Boasting a total shareholder return of 130% over three years, Serko Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Serko that you should be aware of before investing.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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