Here's Why We Think Orcoda Limited's (ASX:ODA) CEO Compensation Looks Fair

Shareholders may be wondering what CEO Geoff Jamieson plans to do to improve the less than great performance at Orcoda Limited (ASX:ODA) recently. At the next AGM coming up on 29 November 2022, 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. In our opinion, CEO compensation does not look excessive and we discuss why.

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

Comparing Orcoda Limited's CEO Compensation With The Industry

According to our data, Orcoda Limited has a market capitalization of AU$14m, and paid its CEO total annual compensation worth AU$348k over the year to June 2022. That's a notable increase of 23% on last year. Notably, the salary which is AU$325.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under AU$303m, the reported median total CEO compensation was AU$499k. This suggests that Geoff Jamieson is paid below the industry median. Moreover, Geoff Jamieson also holds AU$963k worth of Orcoda 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$325k	AU$284k	93%
Other	AU$23k	-	7%
Total Compensation	AU$348k	AU$284k	100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. Orcoda pays out 93% 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.

A Look at Orcoda Limited's Growth Numbers

Over the past three years, Orcoda Limited has seen its earnings per share (EPS) grow by 53% per year. It achieved revenue growth of 110% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Orcoda Limited Been A Good Investment?

Few Orcoda Limited shareholders would feel satisfied with the return of -63% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss is certainly disheartening. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. A key question may be why the fundamentals have not yet been reflected into the share price. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for Orcoda (1 is significant!) that you should be aware of before investing here.

Important note: Orcoda is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.