This Is The Reason Why We Think Technology One Limited's (ASX:TNE) CEO Might Be Underpaid

Key Insights

• Technology One will host its Annual General Meeting on 21st of February
• CEO Ed Chung's total compensation includes salary of AU$521.3k
• The overall pay is 52% below the industry average
• Over the past three years, Technology One's EPS grew by 17% and over the past three years, the total shareholder return was 99%

The solid performance at Technology One Limited (ASX:TNE) has been impressive and shareholders will probably be pleased to know that CEO Ed Chung has delivered. At the upcoming AGM on 21st 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.

View our latest analysis for Technology One

Comparing Technology One Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Technology One Limited has a market capitalization of AU$5.3b, and reported total annual CEO compensation of AU$2.5m for the year to September 2023. That's a notable increase of 10% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$521k.

For comparison, other companies in the Australian Software industry with market capitalizations ranging between AU$3.1b and AU$9.8b had a median total CEO compensation of AU$5.3m. This suggests that Ed Chung is paid below the industry median. Furthermore, Ed Chung directly owns AU$11m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	AU$521k	AU$513k	21%
Other	AU$2.0m	AU$1.8m	79%
Total Compensation	AU$2.5m	AU$2.3m	100%

On an industry level, around 58% of total compensation represents salary and 42% is other remuneration. In Technology One's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Technology One Limited's Growth

Over the past three years, Technology One Limited has seen its earnings per share (EPS) grow by 17% per year. Its revenue is up 17% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Technology One Limited Been A Good Investment?

Most shareholders would probably be pleased with Technology One Limited for providing a total return of 99% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

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.

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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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.