We Discuss Why Damstra Holdings Limited's (ASX:DTC) CEO Compensation May Be Closely Reviewed

Key Insights

• Damstra Holdings will host its Annual General Meeting on 24th of October
• CEO Christian Damstra's total compensation includes salary of AU$466.1k
• Total compensation is 46% above industry average
• Over the past three years, Damstra Holdings' EPS fell by 43% and over the past three years, the total loss to shareholders 95%

Shareholders will probably not be too impressed with the underwhelming results at Damstra Holdings Limited (ASX:DTC) recently. At the upcoming AGM on 24th of October, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Damstra Holdings

Comparing Damstra Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Damstra Holdings Limited has a market capitalization of AU$27m, and reported total annual CEO compensation of AU$750k for the year to June 2023. Notably, that's an increase of 11% over the year before. In particular, the salary of AU$466.1k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Australian Software industry with market capitalizations below AU$314m, we found that the median total CEO compensation was AU$515k. Accordingly, our analysis reveals that Damstra Holdings Limited pays Christian Damstra north of the industry median. Furthermore, Christian Damstra directly owns AU$2.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	AU$466k	AU$431k	62%
Other	AU$284k	AU$245k	38%
Total Compensation	AU$750k	AU$675k	100%

On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. There isn't a significant difference between Damstra Holdings and the broader market, in terms of salary allocation in the overall compensation package. 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.

A Look at Damstra Holdings Limited's Growth Numbers

Damstra Holdings Limited has reduced its earnings per share by 43% a year over the last three years. In the last year, its revenue is up 1.6%.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. 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 Damstra Holdings Limited Been A Good Investment?

With a total shareholder return of -95% over three years, Damstra Holdings Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 1 which is potentially serious) in Damstra Holdings 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.

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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.