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The CEO of 8common Limited (ASX:8CO) is Nic Lim. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Nic Lim’s Compensation Compare With Similar Sized Companies?
According to our data, 8common Limited has a market capitalization of AU$14m, and pays its CEO total annual compensation worth AU$142k. (This figure is for the year to June 2018). It is worth noting that the CEO compensation consists almost entirely of the salary, worth AU$142k. We took a group of companies with market capitalizations below AU$284m, and calculated the median CEO total compensation to be AU$354k.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at 8common has changed from year to year.
Is 8common Limited Growing?
8common Limited has increased its earnings per share (EPS) by an average of 9.7% a year, over the last three years (using a line of best fit). Its revenue is up 11% over last year.
I think the revenue growth is good. And the improvement in earnings per share is modest but respectable. So while performance isn’t amazing, we think it really does seem quite respectable. Although we don’t have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has 8common Limited Been A Good Investment?
Given the total loss of 42% over three years, many shareholders in 8common Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
It appears that 8common Limited remunerates its CEO below most similar sized companies.
It’s well worth noting that while Nic Lim is paid less than most company leaders (at similar sized companies), performance has been somewhat uninspiring, and total returns have been lacking. I am not concerned by the CEO compensation, but it would be good to see improved performance before pay increases. Whatever your view on compensation, you might want to check if insiders are buying or selling 8common shares (free trial).
Important note: 8common may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.