This Is Why Gullewa Limited's (ASX:GUL) CEO Compensation Looks Appropriate

CEO David Deitz has done a decent job of delivering relatively good performance at Gullewa Limited (ASX:GUL) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 29 November 2022. We present our case of why we think CEO compensation looks fair.

Our analysis indicates that GUL is potentially undervalued!

Comparing Gullewa Limited's CEO Compensation With The Industry

According to our data, Gullewa Limited has a market capitalization of AU$12m, and paid its CEO total annual compensation worth AU$446k over the year to June 2022. We note that's an increase of 26% above last year. In particular, the salary of AU$230.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under AU$302m, the reported median total CEO compensation was AU$360k. So it looks like Gullewa compensates David Deitz in line with the median for the industry. What's more, David Deitz holds AU$2.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2022	2021	Proportion (2022)
Salary	AU$230k	AU$160k	52%
Other	AU$216k	AU$193k	48%
Total Compensation	AU$446k	AU$353k	100%

On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. In Gullewa's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Gullewa Limited's Growth Numbers

Gullewa Limited's earnings per share (EPS) grew 4.1% per year over the last three years. In the last year, its revenue is up 27%.

We like the look of the strong year-on-year improvement in revenue. With that in mind, the modestly improving EPS seems positive. We wouldn't say this is necessarily top notch growth, but it is certainly promising. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Gullewa Limited Been A Good Investment?

Most shareholders would probably be pleased with Gullewa Limited for providing a total return of 118% 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.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Gullewa (2 are significant!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.