What Can We Make Of TALi Digital's (ASX:TD1) CEO Compensation?

Glenn Smith became the CEO of TALi Digital Limited (ASX:TD1) in 2017, 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 TALi Digital pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for TALi Digital

Comparing TALi Digital Limited's CEO Compensation With the industry

Our data indicates that TALi Digital Limited has a market capitalization of AU$34m, and total annual CEO compensation was reported as AU$338k for the year to June 2020. We note that's a decrease of 32% compared to last year. In particular, the salary of AU$250.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$262m, we found that the median total CEO compensation was AU$455k. So it looks like TALi Digital compensates Glenn Smith in line with the median for the industry.

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. Our data reveals that TALi Digital allocates salary more or less in line with the wider market. 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.

TALi Digital Limited's Growth

Over the past three years, TALi Digital Limited has seen its earnings per share (EPS) grow by 3.4% per year. Its revenue is down 32% over the previous year.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. 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 TALi Digital Limited Been A Good Investment?

TALi Digital Limited has not done too badly by shareholders, with a total return of 2.3%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

As previously discussed, Glenn is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS and shareholder returns have been stable over the last three years, but have not grown substantially. Considering the steady performance, it's tough to call out CEO compensation as too high, but shareholders might want to see more robust growth metrics before agreeing to a future raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for TALi Digital (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

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.

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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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