Increases to Megaport Limited's (ASX:MP1) CEO Compensation Might Cool off for now

The underwhelming share price performance of Megaport Limited (ASX:MP1) in the past three years would have disappointed many shareholders. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 23 November 2022 will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

Check out the opportunities and risks within the AU IT industry.

How Does Total Compensation For Vincent English Compare With Other Companies In The Industry?

Our data indicates that Megaport Limited has a market capitalization of AU$963m, and total annual CEO compensation was reported as AU$2.6m for the year to June 2022. We note that's a decrease of 27% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$1.0m.

On examining similar-sized companies in the industry with market capitalizations between AU$597m and AU$2.4b, we discovered that the median CEO total compensation of that group was AU$631k. Accordingly, our analysis reveals that Megaport Limited pays Vincent English north of the industry median. Moreover, Vincent English also holds AU$5.6m worth of Megaport stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	AU$1.0m	AU$562k	39%
Other	AU$1.6m	AU$3.0m	61%
Total Compensation	AU$2.6m	AU$3.5m	100%

On an industry level, around 49% of total compensation represents salary and 51% is other remuneration. In Megaport'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.

Megaport Limited's Growth

Over the last three years, Megaport Limited has not seen its earnings per share change much, though they have deteriorated slightly. In the last year, its revenue is up 40%.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Megaport Limited Been A Good Investment?

Few Megaport Limited shareholders would feel satisfied with the return of -35% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Megaport that you should be aware of before investing.

Switching gears from Megaport, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.