The CEO of Norwood Systems Limited (ASX:NOR) is Paul Ostergaard, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Norwood Systems.
Check out our latest analysis for Norwood Systems
Comparing Norwood Systems Limited's CEO Compensation With the industry
According to our data, Norwood Systems Limited has a market capitalization of AU$6.1m, and paid its CEO total annual compensation worth AU$294k over the year to June 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is AU$268.1k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under AU$259m, the reported median total CEO compensation was AU$322k. From this we gather that Paul Ostergaard is paid around the median for CEOs in the industry. Furthermore, Paul Ostergaard directly owns AU$421k worth of shares in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$268k | AU$270k | 91% |
| Other | AU$25k | AU$26k | 9% |
| Total Compensation | AU$294k | AU$295k | 100% |
On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. Norwood Systems pays out 91% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Norwood Systems Limited's Growth
Norwood Systems Limited's earnings per share (EPS) grew 60% per year over the last three years. Its revenue is up 64% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Norwood Systems Limited Been A Good Investment?
With a three year total loss of 85% for the shareholders, Norwood Systems Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary...
As we noted earlier, Norwood Systems pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, shareholder returns paint a sorry picture for the company, finishing in the red over the last three years. But on the bright side, EPS growth is positive over the same period. Considering positive EPS growth, we'd say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.
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 5 warning signs (and 4 which are a bit concerning) in Norwood Systems we think you should know about.
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.
When trading Norwood Systems or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
Valuation is complex, but we're here to simplify it.
Discover if Norwood Systems might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
Access Free AnalysisThis 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
About ASX:NOR
Norwood Systems
Provides mobile voice, messaging, data, and cyber security services to consumers, enterprises, and carriers worldwide.
Medium-low with weak fundamentals.
