In 2016, Gernot Abl was appointed CEO of Esports Mogul Limited (ASX:ESH). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Gernot Abl's Compensation Compare With Similar Sized Companies?
Our data indicates that Esports Mogul Limited is worth AU$14m, and total annual CEO compensation was reported as AU$246k for the year to December 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$225k. We looked at a group of companies with market capitalizations under AU$312m, and the median CEO total compensation was AU$390k.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On a sector level, around 89% of total compensation represents salary and 11% is other remuneration. Esports Mogul does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.
At first glance this seems like a real positive for shareholders, since Gernot Abl is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business. The graphic below shows how CEO compensation at Esports Mogul has changed from year to year.
Is Esports Mogul Limited Growing?
Esports Mogul Limited has seen earnings per share (EPS) move positively by an average of 24% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 520%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Esports Mogul Limited Been A Good Investment?
With a three year total loss of 65%, Esports Mogul Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
Esports Mogul Limited is currently paying its CEO below what is normal for companies of its size.
Many would consider this to indicate that the pay is modest since the business is growing. Unfortunately, some shareholders may be disappointed with their returns, given the company's performance over the last three years. We're not critical of the remuneration Gernot Abl receives, but it would be good to see improved returns to shareholders before the remuneration grows too much. In this case we may want to look deeper into the company. There are some real positives and we could see improved returns in the longer term. Taking a breather from CEO compensation, we've spotted 7 warning signs for Esports Mogul (of which 5 are potentially serious!) you should know about in order to have a holistic understanding of the stock.
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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