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Stephen Leung has been the CEO of Multistack International Limited (ASX:MSI) since 1997, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Stephen Leung Compare With Other Companies In The Industry?
At the time of writing, our data shows that Multistack International Limited has a market capitalization of AU$674k, and reported total annual CEO compensation of AU$85k for the year to December 2019. That's a modest increase of 7.7% on the prior year. It is worth noting that the CEO compensation consists entirely of the salary, worth AU$85k.
In comparison with other companies in the industry with market capitalizations under AU$277m, the reported median total CEO compensation was AU$533k. Accordingly, Multistack International pays its CEO under the industry median. What's more, Stephen Leung holds AU$170k worth of shares in the company in their own name.
On an industry level, around 63% of total compensation represents salary and 37% is other remuneration. Speaking on a company level, Multistack International prefers to tread along a traditional path, disbursing all compensation through a salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Multistack International Limited's Growth
Over the last three years, Multistack International Limited has shrunk its earnings per share by 51% per year. In the last year, its revenue is down 22%.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Multistack International Limited Been A Good Investment?
Given the total shareholder loss of 25% over three years, many shareholders in Multistack International Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
Multistack International rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Stephen is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. While we are quite underwhelmed with EPS growth, the shareholder returns over the past three years have also failed to impress us. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 4 warning signs for Multistack International that investors should think about before committing capital to this stock.
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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