What We Learned About Linius Technologies' (ASX:LNU) CEO Compensation

This article will reflect on the compensation paid to Chris Richardson who has served as CEO of Linius Technologies Limited (ASX:LNU) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Linius Technologies

How Does Total Compensation For Chris Richardson Compare With Other Companies In The Industry?

Our data indicates that Linius Technologies Limited has a market capitalization of AU$73m, and total annual CEO compensation was reported as AU$218k for the year to June 2020. Notably, that's a decrease of 19% over the year before. It is worth noting that the CEO compensation consists entirely of the salary, worth AU$218k.

On comparing similar-sized companies in the industry with market capitalizations below AU$259m, we found that the median total CEO compensation was AU$334k. Accordingly, Linius Technologies pays its CEO under the industry median.

Talking in terms of the industry, salary represented approximately 60% of total compensation out of all the companies we analyzed, while other remuneration made up 40% of the pie. At the company level, Linius Technologies pays Chris Richardson solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Linius Technologies Limited's Growth

Over the past three years, Linius Technologies Limited has seen its earnings per share (EPS) grow by 1.1% per year. It saw its revenue drop 60% over the last year.

We generally like to see a little revenue growth, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Linius Technologies Limited Been A Good Investment?

Since shareholders would have lost about 72% over three years, some Linius Technologies Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Linius Technologies pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we touched on above, Linius Technologies Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But then, EPS growth is lacking and so are the returns to shareholders. We're not critical of the remuneration Chris receives, but it would be good to see improved returns to shareholders before compensation grows too much.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 5 warning signs for Linius Technologies (of which 2 are potentially serious!) that you should know about in order to have a holistic understanding of the stock.

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. 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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