Here's Why Shareholders Will Not Be Complaining About Cobalt Blue Holdings Limited's (ASX:COB) CEO Pay Packet

The performance at Cobalt Blue Holdings Limited (ASX:COB) has been quite strong recently and CEO Joe Kaderavek has played a role in it. Coming up to the next AGM on 25 November 2022, shareholders would be keeping this in mind. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

Our analysis indicates that COB is potentially overvalued!

How Does Total Compensation For Joe Kaderavek Compare With Other Companies In The Industry?

Our data indicates that Cobalt Blue Holdings Limited has a market capitalization of AU$235m, and total annual CEO compensation was reported as AU$807k for the year to June 2022. Notably, that's an increase of 64% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$359k.

On comparing similar companies from the same industry with market caps ranging from AU$150m to AU$601m, we found that the median CEO total compensation was AU$708k. From this we gather that Joe Kaderavek is paid around the median for CEOs in the industry. Moreover, Joe Kaderavek also holds AU$4.7m worth of Cobalt Blue Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	AU$359k	AU$339k	44%
Other	AU$448k	AU$152k	56%
Total Compensation	AU$807k	AU$490k	100%

Speaking on an industry level, nearly 60% of total compensation represents salary, while the remainder of 40% is other remuneration. It's interesting to note that Cobalt Blue Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Cobalt Blue Holdings Limited's Growth

Cobalt Blue Holdings Limited's earnings per share (EPS) grew 19% per year over the last three years. It has seen most of its revenue evaporate over the past year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Cobalt Blue Holdings Limited Been A Good Investment?

Most shareholders would probably be pleased with Cobalt Blue Holdings Limited for providing a total return of 407% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. However, despite the strong growth in earnings and share price growth, the focus for shareholders would be how the company plans to steer the company towards sustainable profitability in the near future.

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 4 warning signs for Cobalt Blue Holdings you should be aware of, and 1 of them is a bit unpleasant.

Important note: Cobalt Blue Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.