Lee-Martin Seymour is the CEO of Xref Limited (ASX:XF1), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether Xref pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Xref
How Does Total Compensation For Lee-Martin Seymour Compare With Other Companies In The Industry?
At the time of writing, our data shows that Xref Limited has a market capitalization of AU$56m, and reported total annual CEO compensation of AU$318k for the year to June 2020. We note that's an increase of 8.4% above last year. In particular, the salary of AU$292.5k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$253m, we found that the median total CEO compensation was AU$323k. From this we gather that Lee-Martin Seymour is paid around the median for CEOs in the industry. Moreover, Lee-Martin Seymour also holds AU$9.5m worth of Xref stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$293k | AU$270k | 92% |
| Other | AU$26k | AU$24k | 8% |
| Total Compensation | AU$318k | AU$294k | 100% |
On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. Xref is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Xref Limited's Growth
Xref Limited has seen its earnings per share (EPS) increase by 4.0% a year over the past three years. Revenue was pretty flat on last year.
We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Xref Limited Been A Good Investment?
With a three year total loss of 50% for the shareholders, Xref Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
As we noted earlier, Xref pays its CEO in line with similar-sized companies belonging to the same industry. But with negative shareholder returns and unimpressive EPS growth, shareholders will surely be disturbed. We'd stop short of saying CEO compensation is inappropriate, but without an improvement in performance, it's sure to draw criticism. Shareholders will also not want to see performance improving before agreeing to any raise.
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 5 warning signs for Xref (of which 2 make us uncomfortable!) that you should know about in order to have a holistic understanding of the stock.
Important note: Xref 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. 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:XF1
Xref
Engages in the development of human resources technology that automates automated reference checking services in Australia, Canada, the United Kingdom, New Zealand, and the United States.
Low and slightly overvalued.
