Did Moalem create value?Earnings is a powerful indication of SAS’s ability to invest shareholders’ funds and generate returns. Therefore I will use earnings as a proxy of Moalem’s performance in the past year. Most recently, SAS delivered negative earnings of -A$15M , which is a further decline from prior year’s loss of -A$10M.
Is SAS’s CEO overpaid relative to the market?
While one size does not fit all, since compensation should be tailored to the specific company and market, we can evaluate a high-level benchmark to see if SAS deviates substantially from its peers. This outcome can help direct shareholders to ask the right question about Moalem’s incentive alignment. On average, an Australian small-cap has a value of $140M, creates earnings of $10M, and pays its CEO at roughly $500,000 annually. Typically I would use earnings and market cap to account for variations in performance, however, SAS’s negative earnings lower the effectiveness of this method. Analyzing the range of remuneration for small-cap executives, it seems like Moalem’s pay outstrips those in comparable companies.
What this means for you:
Are you a shareholder? In the upcoming year’s AGM, shareholders should think about whether another increase in CEO pay is justified, should the board propose another executive pay raise. Although this analysis is relatively simplified, the fact that Moalem’s pay is above its peer group should raise questions as to why this may be the case. To find out more about SAS’s governance, look through our infographic report of the company’s board and management.
Are you a potential investor? Although remuneration can be a useful gauge of whether Moalem’s incentives are well-aligned with SAS’s shareholders, it is certainly not sufficient to base your investment decision solely on this factor. Whether the company is fundamentally strong depends on SAS’s financial health and its future outlook. To research more about these fundamentals, I recommend you check out our simple infographic report on SAS’s financial metrics.PS. If you are not interested in Sky and Space Global anymore, you can use our free platform to see my list of over 50 sustainable companies producing great returns.