We Think Some Shareholders May Hesitate To Increase TNG Limited's (ASX:TNG) CEO Compensation

By
Simply Wall St
Published
November 23, 2021
ASX:TNG
Source: Shutterstock

The underwhelming share price performance of TNG Limited (ASX:TNG) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 30 November 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for TNG

How Does Total Compensation For Paul Burton Compare With Other Companies In The Industry?

According to our data, TNG Limited has a market capitalization of AU$106m, and paid its CEO total annual compensation worth AU$709k over the year to June 2021. We note that's an increase of 18% above last year. Notably, the salary which is AU$522.7k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below AU$276m, reported a median total CEO compensation of AU$352k. Hence, we can conclude that Paul Burton is remunerated higher than the industry median. Furthermore, Paul Burton directly owns AU$584k worth of shares in the company.

Component20212020Proportion (2021)
Salary AU$523k AU$505k 74%
Other AU$186k AU$95k 26%
Total CompensationAU$709k AU$601k100%

On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. TNG pays out 74% of remuneration in the form of a salary, significantly higher than the industry average. 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.

ceo-compensation
ASX:TNG CEO Compensation November 23rd 2021

TNG Limited's Growth

Over the past three years, TNG Limited has seen its earnings per share (EPS) grow by 27% per year. Its revenue is up 23% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has TNG Limited Been A Good Investment?

Given the total shareholder loss of 29% over three years, many shareholders in TNG Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 5 warning signs for TNG (of which 1 can't be ignored!) 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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