How Should Investors React To Countplus Limited’s (ASX:CUP) CEO Pay?

In 2017 Matthew Rowe was appointed CEO of Countplus Limited (ASX:CUP). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Countplus

How Does Matthew Rowe’s Compensation Compare With Similar Sized Companies?

According to our data, Countplus Limited has a market capitalization of AU$96m, and pays its CEO total annual compensation worth AU$725k. (This number is for the twelve months until June 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$424k. We looked at a group of companies with market capitalizations under AU$294m, and the median CEO total compensation was AU$355k.

As you can see, Matthew Rowe is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Countplus Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Countplus has changed from year to year.

ASX:CUP CEO Compensation, August 10th 2019
ASX:CUP CEO Compensation, August 10th 2019

Is Countplus Limited Growing?

On average over the last three years, Countplus Limited has shrunk earnings per share by 68% each year (measured with a line of best fit). Its revenue is down -6.4% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. And the impression is worse when you consider revenue is down year-on-year. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.

Has Countplus Limited Been A Good Investment?

Countplus Limited has not done too badly by shareholders, with a total return of 7.6%, over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.

In Summary…

We compared the total CEO remuneration paid by Countplus Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

While shareholder returns are acceptable, they don’t delight. So you may want to delve deeper, because we don’t think the CEO pay is too low. Shareholders may want to check for free if Countplus insiders are buying or selling shares.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. Thank you for reading.