How Should Investors React To I Synergy Group's (ASX:IS3) CEO Pay?

Lawrence Teo became the CEO of I Synergy Group Limited (ASX:IS3) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether I Synergy Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for I Synergy Group

How Does Total Compensation For Lawrence Teo Compare With Other Companies In The Industry?

At the time of writing, our data shows that I Synergy Group Limited has a market capitalization of AU$11m, and reported total annual CEO compensation of AU$254k for the year to December 2019. We note that's a decrease of 12% compared to last year. In particular, the salary of AU$189.4k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$265m, we found that the median total CEO compensation was AU$334k. From this we gather that Lawrence Teo is paid around the median for CEOs in the industry. Moreover, Lawrence Teo also holds AU$4.4m worth of I Synergy Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 59% of total compensation represents salary, while the remainder of 41% is other remuneration. It's interesting to note that I Synergy Group pays out a greater portion of remuneration through salary, compared to the industry. 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 I Synergy Group Limited's Growth Numbers

I Synergy Group Limited has reduced its earnings per share by 97% a year over the last three years. Its revenue is down 2.7% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has I Synergy Group Limited Been A Good Investment?

Given the total shareholder loss of 58% over three years, many shareholders in I Synergy Group Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, I Synergy Group pays its CEO in line with similar-sized companies belonging to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for I Synergy Group that investors should think about before committing capital to this stock.

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. 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.
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