Shareholders May Not Be So Generous With Schrole Group Ltd's (ASX:SCL) CEO Compensation And Here's Why

Key Insights

• Schrole Group will host its Annual General Meeting on 31st of May
• Total pay for CEO Rob Graham includes AU$347.3k salary
• The total compensation is similar to the average for the industry
• Schrole Group's three-year loss to shareholders was 72% while its EPS grew by 16% over the past three years

The underwhelming share price performance of Schrole Group Ltd (ASX:SCL) 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. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 31st of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Schrole Group

How Does Total Compensation For Rob Graham Compare With Other Companies In The Industry?

At the time of writing, our data shows that Schrole Group Ltd has a market capitalization of AU$6.5m, and reported total annual CEO compensation of AU$494k for the year to December 2023. Notably, that's an increase of 38% over the year before. In particular, the salary of AU$347.3k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Australian Software industry with market capitalizations below AU$302m, reported a median total CEO compensation of AU$484k. From this we gather that Rob Graham is paid around the median for CEOs in the industry. Moreover, Rob Graham also holds AU$654k worth of Schrole Group stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	AU$347k	AU$308k	70%
Other	AU$147k	AU$50k	30%
Total Compensation	AU$494k	AU$358k	100%

On an industry level, roughly 56% of total compensation represents salary and 44% is other remuneration. It's interesting to note that Schrole Group 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.

Schrole Group Ltd's Growth

Schrole Group Ltd's earnings per share (EPS) grew 16% per year over the last three years. Its revenue is up 10% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 Schrole Group Ltd Been A Good Investment?

The return of -72% over three years would not have pleased Schrole Group Ltd shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Schrole Group (of which 3 are potentially serious!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Schrole Group, 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.