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How Does Synertec's (ASX:SOP) CEO Pay Compare With Company Performance?

Simply Wall St
·3 mins read

This article will reflect on the compensation paid to Michael Carroll who has served as CEO of Synertec Corporation Limited (ASX:SOP) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Synertec

Comparing Synertec Corporation Limited's CEO Compensation With the industry

At the time of writing, our data shows that Synertec Corporation Limited has a market capitalization of AU$13m, and reported total annual CEO compensation of AU$365k for the year to June 2020. That is, the compensation was roughly the same as last year. In particular, the salary of AU$333.3k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under AU$285m, the reported median total CEO compensation was AU$442k. From this we gather that Michael Carroll is paid around the median for CEOs in the industry.

Component

2020

2019

Proportion (2020)

Salary

AU$333k

AU$322k

91%

Other

AU$31k

AU$35k

9%

Total Compensation

AU$365k

AU$358k

100%

Speaking on an industry level, nearly 80% of total compensation represents salary, while the remainder of 20% is other remuneration. Synertec is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ceo-compensation

A Look at Synertec Corporation Limited's Growth Numbers

Over the past three years, Synertec Corporation Limited has seen its earnings per share (EPS) grow by 34% per year. It saw its revenue drop 54% over the 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. 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 Synertec Corporation Limited Been A Good Investment?

Synertec Corporation Limited has served shareholders reasonably well, with a total return of 21% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

As previously discussed, Michael is compensated close to the median for companies of its size, and which belong to the same industry. But EPS growth over the last three years has been impressive, although the same cannot be said for shareholder returns. As a result of these considerations, we would suggest the compensation is reasonable, but looking ahead shareholders will likely want to see healthier returns.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for Synertec (2 are potentially serious!) that you should be aware of before investing here.

Switching gears from Synertec, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.