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How Should Investors React To iSentric Limited's (ASX:ICU) CEO Pay?

Simply Wall St

Sean Tham is the CEO of iSentric Limited (ASX:ICU). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for iSentric

How Does Sean Tham's Compensation Compare With Similar Sized Companies?

According to our data, iSentric Limited has a market capitalization of AU$1.7m, and paid its CEO total annual compensation worth AU$256k over the year to June 2019. Notably, the salary of AU$256k is the vast majority of the CEO compensation. We took a group of companies with market capitalizations below AU$292m, and calculated the median CEO total compensation to be AU$381k.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.

You can see, below, how CEO compensation at iSentric has changed over time.

ASX:ICU CEO Compensation, January 9th 2020

Is iSentric Limited Growing?

On average over the last three years, iSentric Limited has shrunk earnings per share by 7.9% each year (measured with a line of best fit). Its revenue is down 29% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has iSentric Limited Been A Good Investment?

With a three year total loss of 84%, iSentric Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

iSentric Limited is currently paying its CEO below what is normal for companies of its size.

Shareholders should note that compensation for Sean Tham is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. So you may want to check if insiders are buying iSentric shares with their own money (free access).

If you want to buy a stock that is better than iSentric, this free list of high return, low debt companies is a great place to look.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.