Here's Why Shareholders May Want To Be Cautious With Increasing Good Drinks Australia Limited's (ASX:GDA) CEO Pay Packet

Key Insights

• Good Drinks Australia to hold its Annual General Meeting on 23rd of November
• CEO John Hoedemaker's total compensation includes salary of AU$444.0k
• The total compensation is similar to the average for the industry
• Over the past three years, Good Drinks Australia's EPS fell by 3.3% and over the past three years, the total loss to shareholders 16%

Shareholders of Good Drinks Australia Limited (ASX:GDA) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also poor, despite revenues growing. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 23rd of November, where they can impact on future company performance by voting on resolutions, including executive compensation. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

Check out our latest analysis for Good Drinks Australia

Comparing Good Drinks Australia Limited's CEO Compensation With The Industry

Our data indicates that Good Drinks Australia Limited has a market capitalization of AU$73m, and total annual CEO compensation was reported as AU$558k for the year to June 2023. We note that's an increase of 12% above last year. We note that the salary portion, which stands at AU$444.0k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Australia Beverage industry with market capitalizations below AU$307m, reported a median total CEO compensation of AU$633k. So it looks like Good Drinks Australia compensates John Hoedemaker in line with the median for the industry. Furthermore, John Hoedemaker directly owns AU$3.9m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	AU$444k	AU$429k	80%
Other	AU$114k	AU$71k	20%
Total Compensation	AU$558k	AU$500k	100%

On an industry level, roughly 65% of total compensation represents salary and 35% is other remuneration. Good Drinks Australia pays out 80% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Good Drinks Australia Limited's Growth

Good Drinks Australia Limited has reduced its earnings per share by 3.3% a year over the last three years. Its revenue is up 54% over the last year.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Good Drinks Australia Limited Been A Good Investment?

With a three year total loss of 16% for the shareholders, Good Drinks Australia Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for Good Drinks Australia you should be aware of, and 1 of them can't be ignored.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.