Why Twenty Seven's (ASX:TSC) CEO Pay Matters

This article will reflect on the compensation paid to Ian Warland who has served as CEO of Twenty Seven Co. Limited (ASX:TSC) since 2018. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Twenty Seven.

See our latest analysis for Twenty Seven

How Does Total Compensation For Ian Warland Compare With Other Companies In The Industry?

At the time of writing, our data shows that Twenty Seven Co. Limited has a market capitalization of AU$13m, and reported total annual CEO compensation of AU$226k for the year to June 2020. That's just a smallish increase of 3.1% on last year. We note that the salary portion, which stands at AU$180.0k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$260m, we found that the median total CEO compensation was AU$350k. This suggests that Ian Warland is paid below the industry median. Moreover, Ian Warland also holds AU$80k worth of Twenty Seven stock directly under their own name.

Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% is other remuneration. Twenty Seven is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.

A Look at Twenty Seven Co. Limited's Growth Numbers

Over the last three years, Twenty Seven Co. Limited has shrunk its earnings per share by 2.3% per year. Its revenue is up 127% over the last year.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Twenty Seven Co. Limited Been A Good Investment?

Since shareholders would have lost about 40% over three years, some Twenty Seven Co. Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Ian is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. But shareholder returns and EPS growth over the past three years are negative, which is cause for concern. In contrast, revenues have increased more recently. So, although Ian is modestly paid, shareholders might want to see positive shareholder returns before warming to the idea of a raise.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 6 warning signs for Twenty Seven you should be aware of, and 5 of them are potentially serious.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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