A Look At dorsaVi's (ASX:DVL) CEO Remuneration

This article will reflect on the compensation paid to Andrew Ronchi who has served as CEO of dorsaVi Ltd (ASX:DVL) since 2008. This analysis will also assess whether dorsaVi pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for dorsaVi

Comparing dorsaVi Ltd's CEO Compensation With the industry

At the time of writing, our data shows that dorsaVi Ltd has a market capitalization of AU$12m, and reported total annual CEO compensation of AU$353k for the year to June 2020. That's a notable decrease of 34% on last year. We note that the salary portion, which stands at AU$285.5k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below AU$260m, reported a median total CEO compensation of AU$408k. So it looks like dorsaVi compensates Andrew Ronchi in line with the median for the industry. Furthermore, Andrew Ronchi directly owns AU$701k worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 65% of total compensation represents salary and 35% is other remuneration. It's interesting to note that dorsaVi pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

dorsaVi Ltd's Growth

Over the last three years, dorsaVi Ltd has shrunk its earnings per share by 15% per year. Its revenue is down 20% over the previous year.

Few shareholders would be pleased to read that EPS have declined. 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has dorsaVi Ltd Been A Good Investment?

Since shareholders would have lost about 85% over three years, some dorsaVi Ltd investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, dorsaVi pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 5 warning signs for dorsaVi (of which 2 don't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Important note: dorsaVi is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. 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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