Edward Chung became the CEO of Technology One Limited (ASX:TNE) in 2017, and we think it's a good time to look at 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 Technology One.
View our latest analysis for Technology One
How Does Total Compensation For Edward Chung Compare With Other Companies In The Industry?
At the time of writing, our data shows that Technology One Limited has a market capitalization of AU$2.9b, and reported total annual CEO compensation of AU$1.8m for the year to September 2020. Notably, that's an increase of 10% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$513k.
On examining similar-sized companies in the industry with market capitalizations between AU$1.4b and AU$4.4b, we discovered that the median CEO total compensation of that group was AU$3.0m. This suggests that Edward Chung is paid below the industry median. Furthermore, Edward Chung directly owns AU$5.3m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$513k | AU$508k | 29% |
| Other | AU$1.3m | AU$1.1m | 71% |
| Total Compensation | AU$1.8m | AU$1.6m | 100% |
Speaking on an industry level, nearly 59% of total compensation represents salary, while the remainder of 41% is other remuneration. It's interesting to note that Technology One allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Technology One Limited's Growth
Technology One Limited has seen its earnings per share (EPS) increase by 12% a year over the past three years. In the last year, its revenue is up 4.6%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Technology One Limited Been A Good Investment?
Most shareholders would probably be pleased with Technology One Limited for providing a total return of 91% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
To Conclude...
As previously discussed, Edward is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. When taking into account the company's strong EPS growth over the past three years, it appears CEO compensation is modest. Plus, we can't ignore the impressive shareholder returns, and won't be surprised if some shareholders were to reward such excellent all-around performance with a raise.
Whatever your view on compensation, you might want to check if insiders are buying or selling Technology One shares (free trial).
Switching gears from Technology One, 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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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.
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About ASX:TNE
Technology One
Develops, markets, sells, implements, and supports integrated enterprise business software solutions in Australia and internationally.
Flawless balance sheet with reasonable growth potential.
