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 method should give us information to assess how appropriately the company pays the CEO.
How Does Guido Arnout's Compensation Compare With Similar Sized Companies?
Our data indicates that 4DS Memory Limited is worth AU$78m, and total annual CEO compensation was reported as AU$698k for the year to June 2019. That's actually a decrease on the year before. While we always look at total compensation first, we note that the salary component is less, at AU$395k. We examined a group of similar sized companies, with market capitalizations of below AU$296m. The median CEO total compensation in that group is AU$381k.
As you can see, Guido Arnout is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean 4DS Memory Limited is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at 4DS Memory has changed from year to year.
Is 4DS Memory Limited Growing?
4DS Memory Limited has increased its earnings per share (EPS) by an average of 45% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 45%.
This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has 4DS Memory Limited Been A Good Investment?
Boasting a total shareholder return of 76% over three years, 4DS Memory Limited has done well by shareholders. 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.
We examined the amount 4DS Memory Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. Shareholders may want to check for free if 4DS Memory insiders are buying or selling shares.
If you want to buy a stock that is better than 4DS Memory, this free list of high return, low debt companies is a great place to look.
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