Stock Analysis

We Take A Look At Why CV Check Ltd's (ASX:CV1) CEO Compensation Is Well Earned

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It would be hard to discount the role that CEO Rod Sherwood has played in delivering the impressive results at CV Check Ltd (ASX:CV1) recently. Coming up to the next AGM on 31 March 2021, shareholders would be keeping this in mind. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

Check out our latest analysis for CV Check

Comparing CV Check Ltd's CEO Compensation With the industry

At the time of writing, our data shows that CV Check Ltd has a market capitalization of AU$53m, and reported total annual CEO compensation of AU$378k for the year to June 2020. That's just a smallish increase of 4.9% on last year. We note that the salary portion, which stands at AU$303.0k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below AU$261m, reported a median total CEO compensation of AU$410k. So it looks like CV Check compensates Rod Sherwood in line with the median for the industry. What's more, Rod Sherwood holds AU$2.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary AU$303k AU$284k 80%
Other AU$75k AU$77k 20%
Total CompensationAU$378k AU$361k100%

On an industry level, roughly 46% of total compensation represents salary and 54% is other remuneration. CV Check is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ASX:CV1 CEO Compensation March 24th 2021

A Look at CV Check Ltd's Growth Numbers

CV Check Ltd has seen its earnings per share (EPS) increase by 53% a year over the past three years. Its revenue is down 1.3% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. 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 CV Check Ltd Been A Good Investment?

Boasting a total shareholder return of 96% over three years, CV Check Ltd has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. 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've identified 3 warning signs for CV Check that investors should be aware of in a dynamic business environment.

Important note: CV Check 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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