Key Things To Understand About GO2 People's (ASX:GO2) CEO Pay Cheque

This article will reflect on the compensation paid to Billy Ferreira who has served as CEO of The GO2 People Limited (ASX:GO2) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for GO2 People

Comparing The GO2 People Limited's CEO Compensation With the industry

At the time of writing, our data shows that The GO2 People Limited has a market capitalization of AU$5.7m, and reported total annual CEO compensation of AU$329k for the year to June 2020. That's a notable decrease of 8.2% on last year. We note that the salary portion, which stands at AU$281.3k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below AU$260m, reported a median total CEO compensation of AU$443k. This suggests that GO2 People remunerates its CEO largely in line with the industry average.

Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. According to our research, GO2 People has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

The GO2 People Limited's Growth

Over the past three years, The GO2 People Limited has seen its earnings per share (EPS) grow by 90% per year. Its revenue is down 37% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has The GO2 People Limited Been A Good Investment?

Given the total shareholder loss of 71% over three years, many shareholders in The GO2 People Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Billy is compensated close to the median for companies of its size, and which belong to the same industry. At the same time, the company has logged negative shareholder returns over the last three years. But on the bright side, EPS growth is positive over the same period. Overall, we wouldn't say Billy is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 3 which make us uncomfortable) in GO2 People we think you should know about.

Important note: GO2 People is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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