Ralph Schmitt became the CEO of Sensera Limited (ASX:SE1) in 2017, 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 assess whether Sensera pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Sensera
How Does Total Compensation For Ralph Schmitt Compare With Other Companies In The Industry?
Our data indicates that Sensera Limited has a market capitalization of AU$31m, and total annual CEO compensation was reported as US$304k for the year to June 2020. Notably, that's a decrease of 47% over the year before. In particular, the salary of US$242.2k, 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$257m, reported a median total CEO compensation of US$342k. From this we gather that Ralph Schmitt is paid around the median for CEOs in the industry. What's more, Ralph Schmitt holds AU$232k worth of shares in the company in their own name.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | US$242k | US$300k | 80% |
| Other | US$61k | US$268k | 20% |
| Total Compensation | US$304k | US$568k | 100% |
On an industry level, roughly 92% of total compensation represents salary and 8.5% is other remuneration. In Sensera's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. 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.
Sensera Limited's Growth
Sensera Limited has seen its earnings per share (EPS) increase by 20% a year over the past three years. In the last year, its revenue is down 15%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Sensera Limited Been A Good Investment?
Since shareholders would have lost about 68% over three years, some Sensera Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
As we noted earlier, Sensera pays its CEO in line with similar-sized companies belonging to the same industry. At the same time, the company has logged negative shareholder returns over the last three years. But EPS growth is moving in a favorable direction, certainly a positive sign. It's tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 6 warning signs for Sensera you should be aware of, and 3 of them are a bit concerning.
Important note: Sensera 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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About ASX:SE1
Sensera
Sensera Limited, an Internet of Things (IoT) sensor solution provider, designs and manufactures MicroElectroMechanical Systems based sensors and modules in the United States.
Low with acceptable track record.
