Here's Why Shareholders May Want To Be Cautious With Increasing Dropsuite Limited's (ASX:DSE) CEO Pay Packet

Key Insights

• Dropsuite will host its Annual General Meeting on 21st of May
• Salary of AU$402.5k is part of CEO Charif El-Ansari's total remuneration
• The overall pay is 52% above the industry average
• Over the past three years, Dropsuite's EPS grew by 116% and over the past three years, the total shareholder return was 41%

Under the guidance of CEO Charif El-Ansari, Dropsuite Limited (ASX:DSE) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 21st of May. However, some shareholders will still be cautious of paying the CEO excessively.

View our latest analysis for Dropsuite

Comparing Dropsuite Limited's CEO Compensation With The Industry

According to our data, Dropsuite Limited has a market capitalization of AU$181m, and paid its CEO total annual compensation worth AU$737k over the year to December 2023. That's a notable increase of 43% on last year. We note that the salary of AU$402.5k makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar-sized companies in the Australian Software industry with market capitalizations below AU$303m, we found that the median total CEO compensation was AU$484k. This suggests that Charif El-Ansari is paid more than the median for the industry. Moreover, Charif El-Ansari also holds AU$9.0m worth of Dropsuite stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	AU$403k	AU$341k	55%
Other	AU$334k	AU$172k	45%
Total Compensation	AU$737k	AU$513k	100%

Speaking on an industry level, nearly 57% of total compensation represents salary, while the remainder of 43% is other remuneration. Dropsuite is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Dropsuite Limited's Growth Numbers

Dropsuite Limited has seen its earnings per share (EPS) increase by 116% a year over the past three years. It achieved revenue growth of 48% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Dropsuite Limited Been A Good Investment?

Boasting a total shareholder return of 41% over three years, Dropsuite Limited has done well by shareholders. 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.

To Conclude...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Dropsuite that investors should be aware of in a dynamic business environment.

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.