Why We Think VEEM Ltd's (ASX:VEE) CEO Compensation Is Not Excessive At All

Despite positive share price growth of 10.0% for VEEM Ltd (ASX:VEE) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 23 November 2022. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for VEEM

Comparing VEEM Ltd's CEO Compensation With The Industry

Our data indicates that VEEM Ltd has a market capitalization of AU$77m, and total annual CEO compensation was reported as AU$533k for the year to June 2022. Notably, that's an increase of 17% over the year before. We note that the salary portion, which stands at AU$492.5k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$295m, we found that the median total CEO compensation was AU$518k. From this we gather that Mark Miocevich is paid around the median for CEOs in the industry. Furthermore, Mark Miocevich directly owns AU$39m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	AU$493k	AU$428k	92%
Other	AU$40k	AU$29k	8%
Total Compensation	AU$533k	AU$456k	100%

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. It's interesting to note that VEEM pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at VEEM Ltd's Growth Numbers

Over the last three years, VEEM Ltd has shrunk its earnings per share by 22% per year. It saw its revenue drop 8.9% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has VEEM Ltd Been A Good Investment?

VEEM Ltd has not done too badly by shareholders, with a total return of 10.0%, over three years. It would be nice to see that metric improve in the future. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

In Summary...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for VEEM that investors should be aware of in a dynamic business environment.

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.