This article will reflect on the compensation paid to Ian Warland who has served as CEO of Twenty Seven Co. Limited (ASX:TSC) since 2018. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Twenty Seven.
Comparing Twenty Seven Co. Limited's CEO Compensation With the industry
Our data indicates that Twenty Seven Co. Limited has a market capitalization of AU$13m, and total annual CEO compensation was reported as AU$226k for the year to June 2020. That's just a smallish increase of 3.1% on last year. In particular, the salary of AU$180.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$260m, we found that the median total CEO compensation was AU$350k. That is to say, Ian Warland is paid under the industry median. Moreover, Ian Warland also holds AU$80k worth of Twenty Seven stock directly under their own name.
Talking in terms of the industry, salary represented approximately 76% of total compensation out of all the companies we analyzed, while other remuneration made up 24% of the pie. Our data reveals that Twenty Seven allocates salary more or less in line with the wider market. 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 Twenty Seven Co. Limited's Growth Numbers
Over the last three years, Twenty Seven Co. Limited has shrunk its earnings per share by 2.3% per year. Its revenue is up 127% over the last year.
Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Twenty Seven Co. Limited Been A Good Investment?
With a three year total loss of 40% for the shareholders, Twenty Seven Co. Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we touched on above, Twenty Seven Co. Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But poor shareholder returns EPS growth have hampered the company over the past three years. Conversely, revenues are increasing at a healthy pace, recently. Though we believe Ian is modestly compensated, shareholders might want to see positive shareholder returns before agreeing compensation should be raised.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 6 warning signs for Twenty Seven (of which 5 are significant!) that you should know about in order to have a holistic understanding of the 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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