This Is Why Computershare Limited's (ASX:CPU) CEO Compensation Looks Appropriate

Performance at Computershare Limited (ASX:CPU) has been rather uninspiring recently and shareholders may be wondering how CEO Stuart Irving plans to fix this. At the next AGM coming up on 09 November 2022, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for Computershare

Comparing Computershare Limited's CEO Compensation With The Industry

According to our data, Computershare Limited has a market capitalization of AU$15b, and paid its CEO total annual compensation worth US$4.2m over the year to June 2022. Notably, that's an increase of 28% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.4m.

On comparing similar companies in the industry with market capitalizations above AU$13b, we found that the median total CEO compensation was US$9.9m. Accordingly, Computershare pays its CEO under the industry median. What's more, Stuart Irving holds AU$3.4m worth of shares in the company in their own name.

Component	2022	2021	Proportion (2022)
Salary	US$1.4m	US$1.4m	34%
Other	US$2.8m	US$1.9m	66%
Total Compensation	US$4.2m	US$3.3m	100%

Speaking on an industry level, salary and non-salary portions, both make up 50% each of the total remuneration. It's interesting to note that Computershare allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Computershare Limited's Growth

Over the last three years, Computershare Limited has shrunk its earnings per share by 21% per year. Its revenue is up 12% over the last year.

Few shareholders would be pleased to read that EPS have declined. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Computershare Limited Been A Good Investment?

We think that the total shareholder return of 70%, over three years, would leave most Computershare Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which is a bit unpleasant) in Computershare we think you should know about.

Important note: Computershare 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. 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.