How Should Investors Feel About Jumbo Interactive's (ASX:JIN) CEO Remuneration?

Mike Veverka became the CEO of Jumbo Interactive Limited (ASX:JIN) in 1999, 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 Jumbo Interactive pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Jumbo Interactive

Comparing Jumbo Interactive Limited's CEO Compensation With the industry

At the time of writing, our data shows that Jumbo Interactive Limited has a market capitalization of AU$961m, and reported total annual CEO compensation of AU$1.3m for the year to June 2020. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at AU$843.3k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between AU$518m and AU$2.1b had a median total CEO compensation of AU$1.2m. So it looks like Jumbo Interactive compensates Mike Veverka in line with the median for the industry. Moreover, Mike Veverka also holds AU$9.4m worth of Jumbo Interactive stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 76% of total compensation represents salary and 24% is other remuneration. Jumbo Interactive sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Jumbo Interactive Limited's Growth Numbers

Over the past three years, Jumbo Interactive Limited has seen its earnings per share (EPS) grow by 35% per year. Its revenue is up 9.1% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Jumbo Interactive Limited Been A Good Investment?

We think that the total shareholder return of 311%, over three years, would leave most Jumbo Interactive Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

As previously discussed, Mike is compensated close to the median for companies of its size, and which belong to the same industry. Investors would surely be happy to see that returns have been great, and that EPS is up. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Jumbo Interactive that investors should look into moving forward.

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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