Here's Why dorsaVi Ltd's (ASX:DVL) CEO Compensation Is The Least Of Shareholders Concerns

Key Insights

• dorsaVi to hold its Annual General Meeting on 30th of November
• CEO Andrew Ronchi's total compensation includes salary of AU$158.3k
• Total compensation is 58% below industry average
• dorsaVi's three-year loss to shareholders was 61% while its EPS grew by 70% over the past three years

The performance at dorsaVi Ltd (ASX:DVL) has been rather lacklustre of late and shareholders may be wondering what CEO Andrew Ronchi is planning to do about this. At the next AGM coming up on 30th 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. In our opinion, CEO compensation does not look excessive and we discuss why.

See our latest analysis for dorsaVi

Comparing dorsaVi Ltd's CEO Compensation With The Industry

At the time of writing, our data shows that dorsaVi Ltd has a market capitalization of AU$7.2m, and reported total annual CEO compensation of AU$221k for the year to June 2023. We note that's a decrease of 12% compared to last year. We note that the salary portion, which stands at AU$158.3k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Australian Medical Equipment industry with market capitalizations below AU$306m, we found that the median total CEO compensation was AU$522k. Accordingly, dorsaVi pays its CEO under the industry median. Furthermore, Andrew Ronchi directly owns AU$300k worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	AU$158k	AU$190k	72%
Other	AU$62k	AU$62k	28%
Total Compensation	AU$221k	AU$252k	100%

Talking in terms of the industry, salary represented approximately 62% of total compensation out of all the companies we analyzed, while other remuneration made up 38% of the pie. dorsaVi pays out 72% 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 dorsaVi Ltd's Growth Numbers

dorsaVi Ltd's earnings per share (EPS) grew 70% per year over the last three years. It saw its revenue drop 26% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has dorsaVi Ltd Been A Good Investment?

With a total shareholder return of -61% over three years, dorsaVi Ltd shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders have earned a negative share price return is certainly disconcerting. This contrasts to the strong EPS growth recently however, and suggests that there may be other factors at play driving down the share price. A key focus for the board and management will be how to align the share price with fundamentals. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

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 4 warning signs for dorsaVi you should be aware of, and 2 of them are significant.

Switching gears from dorsaVi, 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.