Shareholders May Be More Conservative With Reckon Limited's (ASX:RKN) CEO Compensation For Now

The underwhelming share price performance of Reckon Limited (ASX:RKN) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 26 May 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Reckon

How Does Total Compensation For Sam Allert Compare With Other Companies In The Industry?

Our data indicates that Reckon Limited has a market capitalization of AU$91m, and total annual CEO compensation was reported as AU$915k for the year to December 2020. We note that's an increase of 13% above last year. We note that the salary portion, which stands at AU$588.8k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under AU$257m, the reported median total CEO compensation was AU$360k. This suggests that Sam Allert is paid more than the median for the industry. Furthermore, Sam Allert directly owns AU$158k worth of shares in the company.

Component	2020	2019	Proportion (2020)
Salary	AU$589k	AU$577k	64%
Other	AU$326k	AU$232k	36%
Total Compensation	AU$915k	AU$809k	100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. There isn't a significant difference between Reckon and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Reckon Limited's Growth Numbers

Over the past three years, Reckon Limited has seen its earnings per share (EPS) grow by 9.1% per year. In the last year, its revenue changed by just 0.3%.

We're not particularly impressed by the revenue growth, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Reckon Limited Been A Good Investment?

Since shareholders would have lost about 19% over three years, some Reckon Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for Reckon that investors should think about before committing capital to this stock.

Switching gears from Reckon, 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. 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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