Performance at Dropsuite Limited (ASX:DSE) has been reasonably good and CEO Charif Elansari has done a decent job of steering the company in the right direction. 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 26 May 2021. We present our case of why we think CEO compensation looks fair.
Comparing Dropsuite Limited's CEO Compensation With the industry
At the time of writing, our data shows that Dropsuite Limited has a market capitalization of AU$107m, and reported total annual CEO compensation of AU$361k for the year to December 2020. That is, the compensation was roughly the same as last year. Notably, the salary which is AU$357.2k, represents most of the total compensation being paid.
For comparison, other companies in the industry with market capitalizations below AU$257m, reported a median total CEO compensation of AU$360k. So it looks like Dropsuite compensates Charif Elansari in line with the median for the industry. Furthermore, Charif Elansari directly owns AU$5.5m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 61% of total compensation out of all the companies we analyzed, while other remuneration made up 39% of the pie. Dropsuite is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Dropsuite Limited's Growth
Over the last three years, Dropsuite Limited has shrunk its earnings per share by 6.2% per year. Its revenue is up 50% over the last year.
The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 387% over three years, Dropsuite Limited 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.
Dropsuite pays its CEO a majority of compensation through a salary. Although the company has performed relatively well, we still think there are some areas that could be improved. We reckon that there are some shareholders who may be hesitant to increase CEO pay further until EPS growth starts to improve, despite the robust revenue growth.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Dropsuite that investors should look into moving forward.
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.
When trading Dropsuite or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
This article by Simply Wall St is general in nature. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.