Yahoo Finance We Think EROAD Limited's (NZSE:ERD) CEO Compensation Looks Fair
The performance at EROAD Limited (NZSE:ERD) has been quite strong recently and CEO Steven Newman has played a role in it. Coming up to the next AGM on 30 July 2021, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.
View our latest analysis for EROAD
Comparing EROAD Limited's CEO Compensation With the industry
According to our data, EROAD Limited has a market capitalization of NZ$544m, and paid its CEO total annual compensation worth NZ$737k over the year to March 2021. We note that's a decrease of 29% compared to last year. We note that the salary portion, which stands at NZ$603.0k constitutes the majority of total compensation received by the CEO.
On examining similar-sized companies in the industry with market capitalizations between NZ$287m and NZ$1.1b, we discovered that the median CEO total compensation of that group was NZ$678k. So it looks like EROAD compensates Steven Newman in line with the median for the industry. Moreover, Steven Newman also holds NZ$847k worth of EROAD stock directly under their own name.
Component | 2021 | 2020 | Proportion (2021) |
Salary | NZ$603k | NZ$590k | 82% |
Other | NZ$134k | NZ$450k | 18% |
Total Compensation | NZ$737k | NZ$1.0m | 100% |
Talking in terms of the industry, salary represented approximately 66% of total compensation out of all the companies we analyzed, while other remuneration made up 34% of the pie. EROAD pays out 82% of remuneration in the form of a salary, significantly higher than the industry average. 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.
A Look at EROAD Limited's Growth Numbers
Over the past three years, EROAD Limited has seen its earnings per share (EPS) grow by 98% per year. In the last year, its revenue is up 13%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 EROAD Limited Been A Good Investment?
Most shareholders would probably be pleased with EROAD Limited for providing a total return of 103% over three years. 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...
Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in 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.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for EROAD that you should be aware of before investing.
Switching gears from EROAD, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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. 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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