We think Computershare Limited's (ASX:CPU) CEO May Struggle To See Much Of A Pay Rise This Year

The share price of Computershare Limited (ASX:CPU) has struggled to grow by much over the last few years and probably has to do with the fact that earnings growth has gone backwards. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 10 November 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for Computershare

How Does Total Compensation For Stuart Irving Compare With Other Companies In The Industry?

At the time of writing, our data shows that Computershare Limited has a market capitalization of AU$12b, and reported total annual CEO compensation of US$3.4m for the year to June 2021. We note that's a decrease of 15% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.4m.

On examining similar-sized companies in the industry with market capitalizations between AU$5.4b and AU$16b, we discovered that the median CEO total compensation of that group was US$3.4m. From this we gather that Stuart Irving is paid around the median for CEOs in the industry. Furthermore, Stuart Irving directly owns AU$4.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	US$1.4m	US$1.3m	41%
Other	US$2.0m	US$2.7m	59%
Total Compensation	US$3.4m	US$4.0m	100%

On an industry level, roughly 42% of total compensation represents salary and 58% is other remuneration. Although there is a difference in how total compensation is set, Computershare more or less reflects the market in terms of setting the salary. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Computershare Limited's Growth Numbers

Over the last three years, Computershare Limited has shrunk its earnings per share by 17% per year. Revenue was pretty flat on last year.

Overall this is not a very positive result for shareholders. And the flat revenue hardly impresses. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Computershare Limited Been A Good Investment?

With a total shareholder return of 3.2% over three years, Computershare Limited has done okay by shareholders, but there's always room for improvement. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

While it's true that the share price growth hasn't been bad, it's hard to overlook the lack of earnings growth and this makes us question whether there will be any strong catalyst for the stock to improve. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 1 which can't be ignored) in Computershare we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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