Stock Analysis

We Think Shareholders Are Less Likely To Approve A Large Pay Rise For IODM Limited's (ASX:IOD) CEO For Now

  •  Updated
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CEO Mark Reilly has done a decent job of delivering relatively good performance at IODM Limited (ASX:IOD) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 20 October 2021. However, some shareholders may still want to keep CEO compensation within reason.

Check out our latest analysis for IODM

Comparing IODM Limited's CEO Compensation With the industry

At the time of writing, our data shows that IODM Limited has a market capitalization of AU$183m, and reported total annual CEO compensation of AU$558k for the year to June 2021. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$205k.

On comparing similar-sized companies in the industry with market capitalizations below AU$272m, we found that the median total CEO compensation was AU$418k. Accordingly, our analysis reveals that IODM Limited pays Mark Reilly north of the industry median. Furthermore, Mark Reilly directly owns AU$8.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20212020Proportion (2021)
Salary AU$205k AU$160k 37%
Other AU$352k AU$396k 63%
Total CompensationAU$558k AU$556k100%

On an industry level, roughly 64% of total compensation represents salary and 36% is other remuneration. In IODM's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ASX:IOD CEO Compensation October 14th 2021

IODM Limited's Growth

Over the last three years, IODM Limited has shrunk its earnings per share by 27% per year. It achieved revenue growth of 33% over the last year.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has IODM Limited Been A Good Investment?

We think that the total shareholder return of 2,186%, over three years, would leave most IODM Limited shareholders smiling. 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...

Some shareholders will be pleased by the relatively good results, however, the results could still be improved. We still think that some shareholders will be hesitant of increasing CEO pay until EPS growth improves, since they are already paid higher than the industry.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 3 warning signs for IODM (2 shouldn't be ignored!) that you should be aware of before investing here.

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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