Shareholders Will Likely Find Sports Entertainment Group Limited's (ASX:SEG) CEO Compensation Acceptable

The performance at Sports Entertainment Group Limited (ASX:SEG) has been rather lacklustre of late and shareholders may be wondering what CEO Craig Hutchison is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 25 November 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. In our opinion, CEO compensation does not look excessive and we discuss why.

See our latest analysis for Sports Entertainment Group

How Does Total Compensation For Craig Hutchison Compare With Other Companies In The Industry?

Our data indicates that Sports Entertainment Group Limited has a market capitalization of AU$62m, and total annual CEO compensation was reported as AU$446k for the year to June 2021. That's a notable decrease of 29% on last year. We note that the salary portion, which stands at AU$432.3k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$275m, we found that the median total CEO compensation was AU$697k. In other words, Sports Entertainment Group pays its CEO lower than the industry median. Furthermore, Craig Hutchison directly owns AU$13m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	AU$432k	AU$577k	97%
Other	AU$13k	AU$48k	3%
Total Compensation	AU$446k	AU$624k	100%

On an industry level, roughly 60% of total compensation represents salary and 40% is other remuneration. Sports Entertainment Group has gone down a largely traditional route, paying Craig Hutchison a high salary, giving it preference over non-salary benefits. 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 Sports Entertainment Group Limited's Growth Numbers

Sports Entertainment Group Limited's earnings per share (EPS) grew 23% per year over the last three years. Its revenue is up 10% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, 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 Sports Entertainment Group Limited Been A Good Investment?

Given the total shareholder loss of 9.4% over three years, many shareholders in Sports Entertainment Group Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Craig receives almost all of their compensation through a salary. The uninspiring share price returns contrasts with the strong EPS growth, suggesting that there may be other factors at play causing it to diverge from fundamentals. Shareholders will get the chance to question the board on key concerns and revisit their investment thesis with regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Sports Entertainment Group that investors should be aware of in a dynamic business environment.

Switching gears from Sports Entertainment Group, 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.

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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