Shareholders May Not Be So Generous With Xref Limited's (ASX:XF1) CEO Compensation And Here's Why
In the past three years, shareholders of Xref Limited (ASX:XF1) have seen a loss on their investment. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 29 November 2022. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
View our latest analysis for Xref
How Does Total Compensation For Lee-Martin Seymour Compare With Other Companies In The Industry?
According to our data, Xref Limited has a market capitalization of AU$71m, and paid its CEO total annual compensation worth AU$430k over the year to June 2022. Notably, that's an increase of 24% over the year before. We note that the salary portion, which stands at AU$320.2k constitutes the majority of total compensation received by the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$303m, we found that the median total CEO compensation was AU$499k. From this we gather that Lee-Martin Seymour is paid around the median for CEOs in the industry. Furthermore, Lee-Martin Seymour directly owns AU$12m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2022 | 2021 | Proportion (2022) |
Salary | AU$320k | AU$305k | 75% |
Other | AU$109k | AU$40k | 25% |
Total Compensation | AU$430k | AU$345k | 100% |
On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. According to our research, Xref has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Xref Limited's Growth
Xref Limited has seen its earnings per share (EPS) increase by 92% a year over the past three years. It achieved revenue growth of 29% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Xref Limited Been A Good Investment?
With a three year total loss of 3.8% for the shareholders, Xref Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
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. We did our research and spotted 2 warning signs for Xref that investors should look into moving forward.
Switching gears from Xref, 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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