Why We Think Objective Corporation Limited's (ASX:OCL) CEO Compensation Is Not Excessive At All

Key Insights

• Objective to hold its Annual General Meeting on 28th of November
• Total pay for CEO Tony Walls includes AU$274.7k salary
• The total compensation is 70% less than the average for the industry
• Objective's three-year loss to shareholders was 15% while its EPS grew by 23% over the past three years

The performance at Objective Corporation Limited (ASX:OCL) has been rather lacklustre of late and shareholders may be wondering what CEO Tony Walls is planning to do about this. At the next AGM coming up on 28th of November, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We think CEO compensation looks appropriate given the data we have put together.

See our latest analysis for Objective

How Does Total Compensation For Tony Walls Compare With Other Companies In The Industry?

At the time of writing, our data shows that Objective Corporation Limited has a market capitalization of AU$1.0b, and reported total annual CEO compensation of AU$308k for the year to June 2023. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at AU$274.7k constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the Australian Software industry with market caps ranging from AU$609m to AU$2.4b, we found that the median CEO total compensation was AU$1.0m. This suggests that Tony Walls is paid below the industry median.

Component	2023	2022	Proportion (2023)
Salary	AU$275k	AU$276k	89%
Other	AU$33k	AU$23k	11%
Total Compensation	AU$308k	AU$300k	100%

Speaking on an industry level, nearly 58% of total compensation represents salary, while the remainder of 42% is other remuneration. It's interesting to note that Objective pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Objective Corporation Limited's Growth

Objective Corporation Limited has seen its earnings per share (EPS) increase by 23% a year over the past three years. Its revenue is up 3.6% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Objective Corporation Limited Been A Good Investment?

With a three year total loss of 15% for the shareholders, Objective Corporation Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Despite the strong EPS growth recently, the share price has not performed to expectations and it suggests that other factors might be driving it, apart from fundamentals. Shareholders will get the chance to question the board on key concerns and revisit their investment thesis with regards to the company.

So you may want to check if insiders are buying Objective shares with their own money (free access).

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. 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.