What We Learned About Micro-X's (ASX:MX1) CEO Pay

Peter Rowland became the CEO of Micro-X Limited (ASX:MX1) in 2014, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Micro-X pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Micro-X

Comparing Micro-X Limited's CEO Compensation With the industry

At the time of writing, our data shows that Micro-X Limited has a market capitalization of AU$133m, and reported total annual CEO compensation of AU$350k for the year to June 2020. That's a notable increase of 15% on last year. Notably, the salary which is AU$291.1k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under AU$261m, the reported median total CEO compensation was AU$570k. This suggests that Peter Rowland is paid below the industry median. Furthermore, Peter Rowland directly owns AU$4.8m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 59% of total compensation represents salary and 41% is other remuneration. According to our research, Micro-X has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Micro-X Limited's Growth

Over the past three years, Micro-X Limited has seen its earnings per share (EPS) grow by 25% per year. Its revenue is up 120% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Micro-X Limited Been A Good Investment?

Since shareholders would have lost about 8.0% over three years, some Micro-X Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, Micro-X Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, the EPS growth over three years is certainly impressive. 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 shareholders will likely want to hold off on any raise for Peter until investor returns are positive.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Micro-X that investors should think about before committing capital to this stock.

Switching gears from Micro-X, 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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