Does IDT Australia's (ASX:IDT) CEO Salary Compare Well With The Performance Of The Company?

David Sparling has been the CEO of IDT Australia Limited (ASX:IDT) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for IDT Australia

How Does Total Compensation For David Sparling Compare With Other Companies In The Industry?

According to our data, IDT Australia Limited has a market capitalization of AU$48m, and paid its CEO total annual compensation worth AU$464k over the year to June 2020. We note that's a small decrease of 6.6% on last year. In particular, the salary of AU$355.5k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below AU$270m, reported a median total CEO compensation of AU$416k. So it looks like IDT Australia compensates David Sparling in line with the median for the industry. Moreover, David Sparling also holds AU$576k worth of IDT Australia stock directly under their own name.

On an industry level, roughly 66% of total compensation represents salary and 34% is other remuneration. IDT Australia pays out 77% 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 IDT Australia Limited's Growth Numbers

IDT Australia Limited has seen its earnings per share (EPS) increase by 69% a year over the past three years. It achieved revenue growth of 17% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has IDT Australia Limited Been A Good Investment?

Most shareholders would probably be pleased with IDT Australia Limited for providing a total return of 181% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

As we touched on above, IDT Australia Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The company is growing EPS and total shareholder returns have been pleasing. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.

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. We identified 3 warning signs for IDT Australia (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

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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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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