Ron Hodge has been the CEO of InvestSMART Group Limited (ASX:INV) since 2016. 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Ron Hodge’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that InvestSMART Group Limited has a market cap of AU$10m, and is paying total annual CEO compensation of AU$359k. (This number is for the twelve months until June 2018). While we always look at total compensation first, we note that the salary component is less, at AU$264k. We took a group of companies with market capitalizations below AU$287m, and calculated the median CEO total compensation to be AU$353k.
So Ron Hodge is paid around the average of the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.
You can see a visual representation of the CEO compensation at InvestSMART Group, below.
Is InvestSMART Group Limited Growing?
InvestSMART Group Limited has reduced its earnings per share by an average of 32% a year, over the last three years (measured with a line of best fit). It saw its revenue drop -12% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.
Has InvestSMART Group Limited Been A Good Investment?
Given the total loss of 77% over three years, many shareholders in InvestSMART Group Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
Ron Hodge is paid around the same as most CEOs of similar size companies.
The company isn’t growing EPS, and shareholder returns have been disappointing. Few would argue that it’s wise for the company to pay any more, before returns improve. Whatever your view on compensation, you might want to check if insiders are buying or selling InvestSMART Group shares (free trial).
If you want to buy a stock that is better than InvestSMART Group, this free list of high return, low debt companies is a great place to look.
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