Richard Rees became the CEO of Sietel Limited (ASX:SSL) in 1981, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. 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 Sietel
How Does Total Compensation For Richard Rees Compare With Other Companies In The Industry?
Our data indicates that Sietel Limited has a market capitalization of AU$56m, and total annual CEO compensation was reported as AU$517k for the year to September 2020. We note that's an increase of 70% above last year. In particular, the salary of AU$452.4k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$260m, we found that the median total CEO compensation was AU$485k. This suggests that Sietel remunerates its CEO largely in line with the industry average. What's more, Richard Rees holds AU$3.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$452k | AU$240k | 87% |
| Other | AU$65k | AU$65k | 13% |
| Total Compensation | AU$517k | AU$305k | 100% |
Talking in terms of the industry, salary represented approximately 81% of total compensation out of all the companies we analyzed, while other remuneration made up 19% of the pie. Our data reveals that Sietel allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Sietel Limited's Growth
Sietel Limited has seen its earnings per share (EPS) increase by 8.8% a year over the past three years. Its revenue is down 4.7% over the previous year.
We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Sietel Limited Been A Good Investment?
Sietel Limited has served shareholders reasonably well, with a total return of 17% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
To Conclude...
As we touched on above, Sietel 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. However, EPS and total shareholder return are solid yet uninspiring. So, although the CEO compensation seems reasonable, shareholders might want to see some further progress before they agree that Richard should get a raise.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Sietel that investors should be aware of in a dynamic business environment.
Switching gears from Sietel, 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.
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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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About ASX:SSL
Sietel
Invests in industrial, commercial, retail real estate, and listed company securities in Australia.
Slight with acceptable track record.
