Oleg Vornik has been the CEO of DroneShield Limited (ASX:DRO) since 2017. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Oleg Vornik’s Compensation Compare With Similar Sized Companies?
Our data indicates that DroneShield Limited is worth AU$67m, and total annual CEO compensation was reported as AU$637k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at AU$226k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined a group of similar sized companies, with market capitalizations of below AU$285m. The median CEO total compensation in that group is AU$379k.
It would therefore appear that DroneShield Limited pays Oleg Vornik more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at DroneShield has changed over time.
Is DroneShield Limited Growing?
On average over the last three years, DroneShield Limited has grown earnings per share (EPS) by 85% each year (using a line of best fit). It achieved revenue growth of 524% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. We don’t have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has DroneShield Limited Been A Good Investment?
Since shareholders would have lost about 6.8% over three years, some DroneShield Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at DroneShield Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. On the other hand returns to investors over the same period have probably disappointed many. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. Whatever your view on compensation, you might want to check if insiders are buying or selling DroneShield shares (free trial).
Important note: DroneShield 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 email@example.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.
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