Shareholders Will Most Likely Find Connexion Telematics Ltd's (ASX:CXZ) CEO Compensation Acceptable

Key Insights

• Connexion Telematics to hold its Annual General Meeting on 15th of November
• Total pay for CEO Aaryn Nania includes US$129.1k salary
• The overall pay is comparable to the industry average
• Connexion Telematics' EPS declined by 9.1% over the past three years while total shareholder return over the past three years was 41%

Under the guidance of CEO Aaryn Nania, Connexion Telematics Ltd (ASX:CXZ) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 15th of November. We present our case of why we think CEO compensation looks fair.

See our latest analysis for Connexion Telematics

Comparing Connexion Telematics Ltd's CEO Compensation With The Industry

At the time of writing, our data shows that Connexion Telematics Ltd has a market capitalization of AU$21m, and reported total annual CEO compensation of US$238k for the year to June 2023. That's just a smallish increase of 4.7% on last year. Notably, the salary which is US$129.1k, represents a considerable chunk of the total compensation being paid.

For comparison, other companies in the Australian Software industry with market capitalizations below AU$313m, reported a median total CEO compensation of US$330k. So it looks like Connexion Telematics compensates Aaryn Nania in line with the median for the industry. What's more, Aaryn Nania holds AU$1.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$129k	US$154k	54%
Other	US$109k	US$74k	46%
Total Compensation	US$238k	US$228k	100%

On an industry level, roughly 59% of total compensation represents salary and 41% is other remuneration. Although there is a difference in how total compensation is set, Connexion Telematics more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Connexion Telematics Ltd's Growth Numbers

Over the last three years, Connexion Telematics Ltd has shrunk its earnings per share by 9.1% per year. It achieved revenue growth of 74% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Connexion Telematics Ltd Been A Good Investment?

Most shareholders would probably be pleased with Connexion Telematics Ltd for providing a total return of 41% over three years. 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...

Although the company has performed relatively well, we still think there are some areas that could be improved. Despite robust revenue growth, until EPS growth improves, shareholders may be hesitant to increase CEO pay by too much.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Connexion Telematics you should be aware of, and 1 of them doesn't sit too well with us.

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. 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.