Here's Why We Think Dropsuite Limited's (ASX:DSE) CEO Compensation Looks Fair for the time being
Under the guidance of CEO Charif Elansari, Dropsuite Limited (ASX:DSE) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 26 May 2021. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.
See our latest analysis for Dropsuite
How Does Total Compensation For Charif Elansari Compare With Other Companies In The Industry?
Our data indicates that Dropsuite Limited has a market capitalization of AU$107m, and total annual CEO compensation was reported as AU$361k for the year to December 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of AU$357.2k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below AU$257m, reported a median total CEO compensation of AU$360k. From this we gather that Charif Elansari is paid around the median for CEOs in the industry. Furthermore, Charif Elansari directly owns AU$5.5m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$357k | AU$250k | 99% |
Other | AU$3.8k | AU$104k | 1% |
Total Compensation | AU$361k | AU$354k | 100% |
On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. Dropsuite has gone down a largely traditional route, paying Charif Elansari a high salary, giving it preference over non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Dropsuite Limited's Growth
Dropsuite Limited has reduced its earnings per share by 6.2% a year over the last three years. In the last year, its revenue is up 50%.
The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Dropsuite Limited Been A Good Investment?
Boasting a total shareholder return of 387% over three years, Dropsuite Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
To Conclude...
Charif receives almost all of their compensation through a salary. Although the company has performed relatively well, we still think there are some areas that could be improved. We reckon that there are some shareholders who may be hesitant to increase CEO pay further until EPS growth starts to improve, despite the robust revenue growth.
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. That's why we did some digging and identified 2 warning signs for Dropsuite that investors should think about before committing capital to this stock.
Switching gears from Dropsuite, 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.
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