What Does Jumbo Interactive's (ASX:JIN) CEO Pay Reveal?

By
Simply Wall St
Published
October 15, 2020
ASX:JIN

This article will reflect on the compensation paid to Mike Veverka who has served as CEO of Jumbo Interactive Limited (ASX:JIN) since 1999. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Jumbo Interactive

How Does Total Compensation For Mike Veverka Compare With Other Companies In The Industry?

At the time of writing, our data shows that Jumbo Interactive Limited has a market capitalization of AU$769m, 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. Notably, the salary which is AU$843.3k, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from AU$278m to AU$1.1b, we found that the median CEO total compensation was AU$1.1m. So it looks like Jumbo Interactive compensates Mike Veverka in line with the median for the industry. What's more, Mike Veverka holds AU$8.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary AU$843k AU$489k 65%
Other AU$459k AU$826k 35%
Total CompensationAU$1.3m AU$1.3m100%

Talking in terms of the industry, salary represented approximately 77% of total compensation out of all the companies we analyzed, while other remuneration made up 23% of the pie. 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.

ceo-compensation
ASX:JIN CEO Compensation October 15th 2020

Jumbo Interactive Limited's Growth

Jumbo Interactive Limited's earnings per share (EPS) grew 35% per year over the last three years. It achieved revenue growth of 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 nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Jumbo Interactive Limited Been A Good Investment?

Most shareholders would probably be pleased with Jumbo Interactive Limited for providing a total return of 391% over three years. 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. The company is growing EPS and total shareholder returns have been pleasing. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Jumbo Interactive that investors should look into moving forward.

Switching gears from Jumbo Interactive, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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