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This article will reflect on the compensation paid to David Sparling who has served as CEO of IDT Australia Limited (ASX:IDT) since 2018. This analysis will also assess whether IDT Australia pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For David Sparling Compare With Other Companies In The Industry?
Our data indicates that IDT Australia Limited has a market capitalization of AU$46m, and total annual CEO compensation was reported as AU$464k for the year to June 2020. That's a slight decrease of 6.6% on the prior year. We note that the salary portion, which stands at AU$355.5k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$275m, the reported median total CEO compensation was AU$414k. From this we gather that David Sparling is paid around the median for CEOs in the industry. Furthermore, David Sparling directly owns AU$461k worth of shares in the company.
On an industry level, around 66% of total compensation represents salary and 34% is other remuneration. It's interesting to note that IDT Australia pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at IDT Australia Limited's Growth Numbers
Over the past three years, IDT Australia Limited has seen its earnings per share (EPS) grow by 69% per year. It achieved revenue growth of 17% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, 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 IDT Australia Limited Been A Good Investment?
Boasting a total shareholder return of 125% over three years, IDT Australia Limited has done well by shareholders. 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.
As we noted earlier, IDT Australia pays its CEO in line with similar-sized companies belonging to the same industry. Investors would surely be happy to see that returns have been great, and that EPS is up. So one could argue that CEO compensation is quite modest, if you consider company performance! Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for IDT Australia you should be aware of, and 1 of them is a bit concerning.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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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