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The CEO of DomaCom Limited (ASX:DCL) is Arthur Naoumidis, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing DomaCom Limited's CEO Compensation With the industry
Our data indicates that DomaCom Limited has a market capitalization of AU$24m, and total annual CEO compensation was reported as AU$248k for the year to June 2020. Notably, that's an increase of 34% over the year before. Notably, the salary which is AU$198.6k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under AU$274m, the reported median total CEO compensation was AU$378k. Accordingly, DomaCom pays its CEO under the industry median. Furthermore, Arthur Naoumidis directly owns AU$1.6m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. DomaCom pays out 80% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at DomaCom Limited's Growth Numbers
DomaCom Limited has seen its earnings per share (EPS) increase by 27% a year over the past three years. It achieved revenue growth of 12% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 DomaCom Limited Been A Good Investment?
Since shareholders would have lost about 8.0% over three years, some DomaCom Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, DomaCom pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Importantly though, the company has impressed with its EPS growth over three years. Although we would've liked to see positive investor returns, it would be bold of us to criticize CEO compensation when EPS are up. But we believe shareholders would want to see healthier returns before the CEO gets a raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 5 warning signs for DomaCom (of which 3 are a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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