Here's What We Learned About The CEO Pay At CPT Global Limited (ASX:CGO)

This article will reflect on the compensation paid to Gerry Tuddenham who has served as CEO of CPT Global Limited (ASX:CGO) since 2004. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for CPT Global

Comparing CPT Global Limited's CEO Compensation With the industry

At the time of writing, our data shows that CPT Global Limited has a market capitalization of AU$11m, and reported total annual CEO compensation of AU$443k for the year to June 2020. That's a modest increase of 4.1% on the prior year. Notably, the salary which is AU$400.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under AU$263m, the reported median total CEO compensation was AU$397k. So it looks like CPT Global compensates Gerry Tuddenham in line with the median for the industry. Furthermore, Gerry Tuddenham directly owns AU$3.7m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 66% of total compensation represents salary and 34% is other remuneration. CPT Global is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at CPT Global Limited's Growth Numbers

CPT Global Limited has reduced its earnings per share by 67% a year over the last three years. Its revenue is down 12% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 CPT Global Limited Been A Good Investment?

We think that the total shareholder return of 75%, over three years, would leave most CPT Global 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.

In Summary...

As previously discussed, Gerry is compensated close to the median for companies of its size, and which belong to the same industry. This isn't great when you look at it against the backdrop of EPS growth, which has been negative for the past three years. On the other hand, shareholder returns are showing positive trends over the same time frame. We do not think CEO compensation is a problem, but shrinking EPS is undoubtedly an issue that will have to be addressed.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for CPT Global (1 can't be ignored!) that you should be aware of before investing here.

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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