It's Unlikely That Acrux Limited's (ASX:ACR) CEO Will See A Huge Pay Rise This Year

Shareholders of Acrux Limited (ASX:ACR) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 22 November 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Acrux

How Does Total Compensation For Michael Kotsanis Compare With Other Companies In The Industry?

Our data indicates that Acrux Limited has a market capitalization of AU$35m, and total annual CEO compensation was reported as AU$645k for the year to June 2021. Notably, that's an increase of 27% over the year before. We note that the salary portion, which stands at AU$468.3k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below AU$272m, reported a median total CEO compensation of AU$493k. Accordingly, our analysis reveals that Acrux Limited pays Michael Kotsanis north of the industry median. Moreover, Michael Kotsanis also holds AU$189k worth of Acrux stock directly under their own name.

Component	2021	2020	Proportion (2021)
Salary	AU$468k	AU$452k	73%
Other	AU$177k	AU$58k	27%
Total Compensation	AU$645k	AU$510k	100%

Talking in terms of the industry, salary represented approximately 59% of total compensation out of all the companies we analyzed, while other remuneration made up 41% of the pie. Acrux pays out 73% of remuneration in the form of a salary, significantly higher than the industry average. 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 Acrux Limited's Growth Numbers

Over the past three years, Acrux Limited has seen its earnings per share (EPS) grow by 5.0% per year. In the last year, its revenue is up 6.7%.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but we're happy with the modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Acrux Limited Been A Good Investment?

With a total shareholder return of -34% over three years, Acrux Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 3 which are a bit unpleasant) in Acrux we think you should know about.

Switching gears from Acrux, 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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