Shareholders May Not Be So Generous With DTI Group Limited's (ASX:DTI) CEO Compensation And Here's Why

In the past three years, the share price of DTI Group Limited (ASX:DTI) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 29 November 2022 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out the opportunities and risks within the AU Electronic industry.

How Does Total Compensation For Matt Strack Compare With Other Companies In The Industry?

At the time of writing, our data shows that DTI Group Limited has a market capitalization of AU$6.7m, and reported total annual CEO compensation of AU$419k for the year to June 2022. We note that's an increase of 29% above last year. We note that the salary portion, which stands at AU$307.3k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below AU$303m, reported a median total CEO compensation of AU$383k. From this we gather that Matt Strack is paid around the median for CEOs in the industry.

Component	2022	2021	Proportion (2022)
Salary	AU$307k	AU$295k	73%
Other	AU$112k	AU$30k	27%
Total Compensation	AU$419k	AU$325k	100%

On an industry level, around 74% of total compensation represents salary and 26% is other remuneration. Although there is a difference in how total compensation is set, DTI Group more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

DTI Group Limited's Growth

Over the past three years, DTI Group Limited has seen its earnings per share (EPS) grow by 117% per year. Its revenue is down 14% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has DTI Group Limited Been A Good Investment?

Given the total shareholder loss of 23% over three years, many shareholders in DTI Group Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 3 warning signs for DTI Group that investors should be aware of in a dynamic business environment.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.