How Should Investors Feel About Cobalt Blue Holdings' (ASX:COB) CEO Remuneration?

Joe Kaderavek has been the CEO of Cobalt Blue Holdings Limited (ASX:COB) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Cobalt Blue Holdings.

Check out our latest analysis for Cobalt Blue Holdings

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

At the time of writing, our data shows that Cobalt Blue Holdings Limited has a market capitalization of AU$107m, and reported total annual CEO compensation of AU$450k for the year to June 2020. That's a notable decrease of 12% on last year. Notably, the salary which is AU$304.4k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below AU$252m, reported a median total CEO compensation of AU$309k. Hence, we can conclude that Joe Kaderavek is remunerated higher than the industry median. Furthermore, Joe Kaderavek directly owns AU$3.0m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 68% of total compensation represents salary and 32% is other remuneration. There isn't a significant difference between Cobalt Blue Holdings and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Cobalt Blue Holdings Limited's Growth

Over the past three years, Cobalt Blue Holdings Limited has seen its earnings per share (EPS) grow by 4.4% per year. In the last year, its revenue is up 77%.

It's great to see that revenue growth is strong. Combined with modest EPS growth, we get a good impression of the company. We wouldn't say this is necessarily top notch growth, but it is certainly promising. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Cobalt Blue Holdings Limited Been A Good Investment?

With a three year total loss of 21% for the shareholders, Cobalt Blue Holdings Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, Cobalt Blue Holdings Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Over the last three years, shareholder returns have been downright disappointing for Cobalt Blue Holdings, and although EPS growth is steady, it hasn't set the world on fire. This doesn't look great when you consider Joe is taking home compensation north of the industry average. With such poor returns, we would understand if shareholders had concerns related to the CEO's pay.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for Cobalt Blue Holdings (2 shouldn't be ignored!) that you should be aware of before investing here.

Switching gears from Cobalt Blue Holdings, 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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