John Borshoff became the CEO of Deep Yellow Limited (ASX:DYL) in 2016. 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does John Borshoff's Compensation Compare With Similar Sized Companies?
According to our data, Deep Yellow Limited has a market capitalization of AU$70m, and paid its CEO total annual compensation worth AU$899k over the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at . Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined a group of similar sized companies, with market capitalizations of below AU$286m. The median CEO total compensation in that group is AU$381k.
As you can see, John Borshoff is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Deep Yellow Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Deep Yellow, below.
Is Deep Yellow Limited Growing?
Deep Yellow Limited has increased its earnings per share (EPS) by an average of 27% a year, over the last three years (using a line of best fit). Its revenue is down 21% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. 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 shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Deep Yellow Limited Been A Good Investment?
Since shareholders would have lost about 36% over three years, some Deep Yellow Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at Deep Yellow Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Deep Yellow (free visualization of insider trades).
Important note: Deep Yellow may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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