Here's Why Shareholders Will Not Be Complaining About IDT Australia Limited's (ASX:IDT) CEO Pay Packet

We have been pretty impressed with the performance at IDT Australia Limited (ASX:IDT) recently and CEO David Sparling deserves a mention for their role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 15 November 2021. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

View our latest analysis for IDT Australia

Comparing IDT Australia Limited's CEO Compensation With the industry

According to our data, IDT Australia Limited has a market capitalization of AU$108m, and paid its CEO total annual compensation worth AU$600k over the year to June 2021. That's a notable increase of 30% on last year. We note that the salary of AU$355.5k makes up a sizeable portion of the total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below AU$269m, reported a median total CEO compensation of AU$480k. From this we gather that David Sparling is paid around the median for CEOs in the industry. Moreover, David Sparling also holds AU$1.3m worth of IDT Australia stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	AU$356k	AU$356k	59%
Other	AU$245k	AU$108k	41%
Total Compensation	AU$600k	AU$464k	100%

Speaking on an industry level, nearly 59% of total compensation represents salary, while the remainder of 41% is other remuneration. IDT Australia is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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's earnings per share (EPS) grew 95% per year over the last three years. It achieved revenue growth of 19% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 IDT Australia Limited Been A Good Investment?

Boasting a total shareholder return of 165% over three years, IDT Australia Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Seeing that company performance has been quite good recently, some shareholders may feel that CEO compensation may not be the biggest focus in the upcoming AGM. Seeing that earnings growth and share price performance seems to be on the right path, the more pressing focus for shareholders at the AGM may be how the board and management plans to turn the company into a sustainably profitable one.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for IDT Australia that investors should be aware of in a dynamic business environment.

Important note: IDT Australia 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.

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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