Here's Why Technology One Limited's (ASX:TNE) CEO May Deserve A Raise

Key Insights

• Technology One will host its Annual General Meeting on 19th of February
• Salary of AU$829.3k is part of CEO Ed Chung's total remuneration
• The overall pay is 62% below the industry average
• Technology One's total shareholder return over the past three years was 222% while its EPS grew by 17% over the past three years

The impressive results at Technology One Limited (ASX:TNE) recently will be great news for shareholders. At the upcoming AGM on 19th of February, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

See our latest analysis for Technology One

How Does Total Compensation For Ed 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$11b, and reported total annual CEO compensation of AU$3.4m for the year to September 2024. That's a notable increase of 36% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$829k.

On comparing similar companies from the Australian Software industry with market caps ranging from AU$6.4b to AU$19b, we found that the median CEO total compensation was AU$9.1m. That is to say, Ed Chung is paid under the industry median. What's more, Ed Chung holds AU$23m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	AU$829k	AU$521k	24%
Other	AU$2.6m	AU$2.0m	76%
Total Compensation	AU$3.4m	AU$2.5m	100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. Technology One sets aside a smaller share of compensation for salary, in comparison to the overall 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 17% a year over the past three years. Its revenue is up 18% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 Technology One Limited Been A Good Investment?

Boasting a total shareholder return of 222% over three years, Technology One Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Technology One that investors should think about before committing capital to this stock.

Important note: Technology One 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.