What We Learned About Delecta's (ASX:DLC) CEO Pay

By
Simply Wall St
Published
January 13, 2021
ASX:DLC
Source: Shutterstock

Malcolm Day is the CEO of Delecta Limited (ASX:DLC), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Delecta.

See our latest analysis for Delecta

Comparing Delecta Limited's CEO Compensation With the industry

At the time of writing, our data shows that Delecta Limited has a market capitalization of AU$6.1m, and reported total annual CEO compensation of AU$268k for the year to June 2020. That's a notable increase of 8.1% on last year. We note that the salary portion, which stands at AU$180.0k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$259m, we found that the median total CEO compensation was AU$409k. Accordingly, Delecta pays its CEO under the industry median. Furthermore, Malcolm Day directly owns AU$1.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary AU$180k AU$240k 67%
Other AU$88k AU$7.6k 33%
Total CompensationAU$268k AU$248k100%

On an industry level, around 67% of total compensation represents salary and 33% is other remuneration. There isn't a significant difference between Delecta and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
ASX:DLC CEO Compensation January 13th 2021

Delecta Limited's Growth

Delecta Limited has reduced its earnings per share by 97% a year over the last three years. In the last year, its revenue is up 8.9%.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. 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 Delecta Limited Been A Good Investment?

Delecta Limited has generated a total shareholder return of 20% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As we noted earlier, Delecta pays its CEO lower than the norm for similar-sized companies belonging to the same industry. While we have not been overly impressed by shareholder returns, EPS growth has been negative over the last three years, a real headache for the company. It's tough for us to say that Malcolm is earning a high compensation, but any bump in pay is unlikely at this stage since shareholders will likely hold off support until performance improves.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Delecta (of which 2 make us uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.