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Chris Noone has been the CEO of Collaborate Corporation Limited (ASX:CL8) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Collaborate Corporation Limited's CEO Compensation With the industry
Our data indicates that Collaborate Corporation Limited has a market capitalization of AU$10m, and total annual CEO compensation was reported as AU$244k for the year to June 2020. That's a notable decrease of 9.0% on last year. In particular, the salary of AU$215.6k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below AU$272m, reported a median total CEO compensation of AU$240k. This suggests that Collaborate remunerates its CEO largely in line with the industry average. What's more, Chris Noone holds AU$73k worth of shares in the company in their own name.
On an industry level, around 63% of total compensation represents salary and 37% is other remuneration. Collaborate pays out 88% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Collaborate Corporation Limited's Growth
Collaborate Corporation Limited has seen its earnings per share (EPS) increase by 3.2% a year over the past three years. It achieved revenue growth of 16% over the last year.
This revenue growth could really point to a brighter future. And the improvement in EPSis modest but respectable. Although we'll stop short of calling the stock a top performer, we think the company has potential. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Collaborate Corporation Limited Been A Good Investment?
Since shareholders would have lost about 70% over three years, some Collaborate Corporation Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, Collaborate pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, Collaborate is suffering from adverse shareholder returns and althoughEPS have grown over the past three years, they have not been extraordinary. CEO pay isn't exceptionally high, but considering poor performance, shareholders will likely hold off support for a raise until results improve.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 5 warning signs for Collaborate (4 are a bit unpleasant!) that you should be aware of before investing here.
Switching gears from Collaborate, 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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