The CEO of 4DS Memory Limited (ASX:4DS) is Guido Arnout. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Guido Arnout's Compensation Compare With Similar Sized Companies?
Our data indicates that 4DS Memory Limited is worth AU$47m, and total annual CEO compensation was reported as AU$698k for the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$395k. We looked at a group of companies with market capitalizations under AU$313m, and the median CEO total compensation was AU$388k.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of 4DS Memory. Speaking on an industry level, we can see that nearly 56% of total compensation represents salary, while the remainder of 44% is other remuneration. So it seems like there isn't a significant difference between 4DS Memory and the broader market, in terms of salary allocation in the overall compensation package.
Thus we can conclude that Guido Arnout receives more in total compensation than the median of a group of companies in the same market, and of similar size to 4DS Memory Limited. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. You can see, below, how CEO compensation at 4DS Memory has changed over time.
Is 4DS Memory Limited Growing?
4DS Memory Limited has reduced its earnings per share by an average of 20% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 39% over the last year.
Investors should note that, over three years, earnings per share are down. On the other hand, the strong revenue growth suggests the business is growing. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has 4DS Memory Limited Been A Good Investment?
I think that the total shareholder return of 100%, over three years, would leave most 4DS Memory Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We compared the total CEO remuneration paid by 4DS Memory Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Over the last three years returns to investors have been great, though we might have liked stronger business growth. So, considering these tasty returns, the CEO compensation may be quite appropriate. Shifting gears from CEO pay for a second, we've spotted 6 warning signs for 4DS Memory you should be aware of, and 2 of them are a bit unpleasant.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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