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Why Enghouse Systems Limited's (TSE:ENGH) CEO Pay Matters To You

Simply Wall St

Stephen Sadler has been the CEO of Enghouse Systems Limited (TSE:ENGH) since 2000. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. 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.

Check out our latest analysis for Enghouse Systems

How Does Stephen Sadler's Compensation Compare With Similar Sized Companies?

According to our data, Enghouse Systems Limited has a market capitalization of CA$3.0b, and paid its CEO total annual compensation worth CA$4.6m over the year to October 2018. While we always look at total compensation first, we note that the salary component is less, at CA$615k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from CA$1.3b to CA$4.3b, we found the median CEO total compensation was CA$2.9m.

As you can see, Stephen Sadler is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Enghouse Systems Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

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

TSX:ENGH CEO Compensation, February 7th 2020
TSX:ENGH CEO Compensation, February 7th 2020

Is Enghouse Systems Limited Growing?

Enghouse Systems Limited has increased its earnings per share (EPS) by an average of 13% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 13%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.

Has Enghouse Systems Limited Been A Good Investment?

Boasting a total shareholder return of 113% over three years, Enghouse Systems Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

We compared the total CEO remuneration paid by Enghouse Systems Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. Shareholders may want to check for free if Enghouse Systems insiders are buying or selling shares.

Important note: Enghouse Systems may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.