We Think archTIS Limited's (ASX:AR9) CEO Compensation Looks Fair

It would be hard to discount the role that CEO Daniel Lai has played in delivering the impressive results at archTIS Limited (ASX:AR9) recently. Shareholders will have this at the front of their minds in the upcoming AGM on 24 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. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

See our latest analysis for archTIS

How Does Total Compensation For Daniel Lai Compare With Other Companies In The Industry?

Our data indicates that archTIS Limited has a market capitalization of AU$53m, and total annual CEO compensation was reported as AU$308k for the year to June 2021. We note that's an increase of 14% above last year. We note that the salary portion, which stands at AU$277.0k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below AU$273m, reported a median total CEO compensation of AU$412k. This suggests that archTIS remunerates its CEO largely in line with the industry average. What's more, Daniel Lai holds AU$2.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	AU$277k	AU$230k	90%
Other	AU$31k	AU$41k	10%
Total Compensation	AU$308k	AU$271k	100%

On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. archTIS pays out 90% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at archTIS Limited's Growth Numbers

archTIS Limited has seen its earnings per share (EPS) increase by 30% a year over the past three years. Its revenue is up 743% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has archTIS Limited Been A Good Investment?

We think that the total shareholder return of 96%, over three years, would leave most archTIS Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Given the improved performance, shareholders may be more forgiving of CEO compensation 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 5 warning signs for archTIS that investors should look into moving forward.

Switching gears from archTIS, 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.

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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