Here's Why We Think Boom Logistics Limited's (ASX:BOL) CEO Compensation Looks Fair for the time being
The share price of Boom Logistics Limited (ASX:BOL) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. The upcoming AGM on 26 November 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.
Check out our latest analysis for Boom Logistics
Comparing Boom Logistics Limited's CEO Compensation With the industry
According to our data, Boom Logistics Limited has a market capitalization of AU$77m, and paid its CEO total annual compensation worth AU$777k over the year to June 2021. Notably, that's an increase of 19% over the year before. Notably, the salary which is AU$432.5k, represents a considerable chunk of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under AU$275m, the reported median total CEO compensation was AU$634k. So it looks like Boom Logistics compensates Tony Spassopoulos in line with the median for the industry. What's more, Tony Spassopoulos holds AU$270k worth of shares in the company in their own name.
Component | 2021 | 2020 | Proportion (2021) |
Salary | AU$433k | AU$409k | 56% |
Other | AU$345k | AU$242k | 44% |
Total Compensation | AU$777k | AU$651k | 100% |
Speaking on an industry level, nearly 53% of total compensation represents salary, while the remainder of 47% is other remuneration. Boom Logistics is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Boom Logistics Limited's Growth Numbers
Over the last three years, Boom Logistics Limited has shrunk its earnings per share by 31% per year. In the last year, its revenue is down 6.6%.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Boom Logistics Limited Been A Good Investment?
With a total shareholder return of 26% over three years, Boom Logistics Limited shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 3 warning signs for Boom Logistics that investors should look into moving forward.
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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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