What Does Praemium's (ASX:PPS) CEO Pay Reveal?

Michael Ohanessian became the CEO of Praemium Limited (ASX:PPS) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Praemium pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Praemium

Comparing Praemium Limited's CEO Compensation With the industry

According to our data, Praemium Limited has a market capitalization of AU$206m, and paid its CEO total annual compensation worth AU$767k over the year to June 2020. We note that's an increase of 13% above last year. In particular, the salary of AU$510.0k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between AU$137m and AU$549m, we discovered that the median CEO total compensation of that group was AU$636k. From this we gather that Michael Ohanessian is paid around the median for CEOs in the industry. Furthermore, Michael Ohanessian directly owns AU$8.0m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 62% of total compensation represents salary and 38% is other remuneration. Praemium is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Praemium Limited's Growth Numbers

Praemium Limited has seen its earnings per share (EPS) increase by 90% a year over the past three years. It achieved revenue growth of 14% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Praemium Limited Been A Good Investment?

With a total shareholder return of 19% over three years, Praemium Limited shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As we touched on above, Praemium Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But EPS growth over the last three years has been impressive, although the same cannot be said for shareholder returns. Considering overall performance, we'd say the compensation is fair, although stockholders will want to see higher returns moving forward.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Praemium that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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