Shareholders Will Probably Not Have Any Issues With Strategic Elements Ltd's (ASX:SOR) CEO Compensation

Key Insights

• Strategic Elements to hold its Annual General Meeting on 28th of November
• CEO Charles Murphy's total compensation includes salary of AU$282.0k
• The overall pay is 35% below the industry average
• Strategic Elements' EPS grew by 5.5% over the past three years while total shareholder loss over the past three years was 38%

Performance at Strategic Elements Ltd (ASX:SOR) has been rather uninspiring recently and shareholders may be wondering how CEO Charles Murphy plans to fix this. At the next AGM coming up on 28th of November, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

See our latest analysis for Strategic Elements

Comparing Strategic Elements Ltd's CEO Compensation With The Industry

Our data indicates that Strategic Elements Ltd has a market capitalization of AU$36m, and total annual CEO compensation was reported as AU$307k for the year to June 2023. This was the same as last year. In particular, the salary of AU$282.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Australian Capital Markets industry with market capitalizations below AU$305m, reported a median total CEO compensation of AU$473k. This suggests that Charles Murphy is paid below the industry median. Furthermore, Charles Murphy directly owns AU$811k worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	AU$282k	AU$282k	92%
Other	AU$25k	AU$25k	8%
Total Compensation	AU$307k	AU$307k	100%

Talking in terms of the industry, salary represented approximately 65% of total compensation out of all the companies we analyzed, while other remuneration made up 35% of the pie. Strategic Elements pays out 92% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Strategic Elements Ltd's Growth Numbers

Strategic Elements Ltd has seen its earnings per share (EPS) increase by 5.5% a year over the past three years. In the last year, its revenue is down 92%.

We generally like to see a little revenue growth, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Strategic Elements Ltd Been A Good Investment?

Few Strategic Elements Ltd shareholders would feel satisfied with the return of -38% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The loss to shareholders over the past three years is certainly concerning. The disappointing performance may have something to do with the flat earnings growth. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Strategic Elements (of which 2 are significant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Strategic Elements, 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.