We Think Shareholders May Want To Consider A Review Of GTN Limited's (ASX:GTN) CEO Compensation Package

Shareholders will probably not be too impressed with the underwhelming results at GTN Limited (ASX:GTN) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 11 November 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for GTN

Comparing GTN Limited's CEO Compensation With the industry

Our data indicates that GTN Limited has a market capitalization of AU$114m, and total annual CEO compensation was reported as AU$1.8m for the year to June 2021. We note that's an increase of 11% above last year. Notably, the salary which is AU$1.10m, represents a considerable chunk of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below AU$269m, reported a median total CEO compensation of AU$832k. Hence, we can conclude that Bill Yde is remunerated higher than the industry median. What's more, Bill Yde holds AU$1.5m worth of shares in the company in their own name.

Component	2021	2020	Proportion (2021)
Salary	AU$1.1m	AU$1.2m	60%
Other	AU$746k	AU$500k	40%
Total Compensation	AU$1.8m	AU$1.7m	100%

Speaking on an industry level, nearly 60% of total compensation represents salary, while the remainder of 40% is other remuneration. Although there is a difference in how total compensation is set, GTN more or less reflects the market in terms of setting the salary. 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.

A Look at GTN Limited's Growth Numbers

Over the last three years, GTN Limited has shrunk its earnings per share by 99% per year. Its revenue is down 11% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has GTN Limited Been A Good Investment?

Few GTN Limited shareholders would feel satisfied with the return of -73% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for GTN that investors should look into moving forward.

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.

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.

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