How Should Investors Feel About Scout Security's (ASX:SCT) CEO Remuneration?

The CEO of Scout Security Limited (ASX:SCT) is Dan Roberts, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Scout Security pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Scout Security

How Does Total Compensation For Dan Roberts Compare With Other Companies In The Industry?

At the time of writing, our data shows that Scout Security Limited has a market capitalization of AU$17m, and reported total annual CEO compensation of AU$223k for the year to June 2020. That's a fairly small increase of 6.6% over the previous year. It is worth noting that the CEO compensation consists entirely of the salary, worth AU$223k.

On comparing similar-sized companies in the industry with market capitalizations below AU$259m, we found that the median total CEO compensation was AU$501k. Accordingly, Scout Security pays its CEO under the industry median. Furthermore, Dan Roberts directly owns AU$1.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 72% of total compensation represents salary, while the remainder of 28% is other remuneration. Speaking on a company level, Scout Security prefers to tread along a traditional path, disbursing all compensation through a salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Scout Security Limited's Growth

Scout Security Limited has seen its earnings per share (EPS) increase by 31% a year over the past three years. In the last year, its revenue is up 7.5%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Scout Security Limited Been A Good Investment?

Since shareholders would have lost about 50% over three years, some Scout Security Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Scout Security rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we touched on above, Scout Security Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Importantly though, the company has impressed with its EPS growth over three years. Although we would've liked to see positive investor returns, it would be bold of us to criticize CEO compensation when EPS are up. But we believe shareholders would want to see healthier returns before the CEO gets a raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 6 warning signs for Scout Security (2 can't be ignored!) that you should be aware of before investing here.

Switching gears from Scout Security, 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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