Should Shareholders Reconsider Senetas Corporation Limited's (ASX:SEN) CEO Compensation Package?

Shareholders will probably not be too impressed with the underwhelming results at Senetas Corporation Limited (ASX:SEN) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 18 November 2022. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Our analysis indicates that SEN is potentially overvalued!

How Does Total Compensation For Andrew Wilson Compare With Other Companies In The Industry?

Our data indicates that Senetas Corporation Limited has a market capitalization of AU$52m, and total annual CEO compensation was reported as AU$540k for the year to June 2022. That's a notable increase of 16% on last year. We note that the salary portion, which stands at AU$461.4k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$304m, we found that the median total CEO compensation was AU$508k. So it looks like Senetas compensates Andrew Wilson in line with the median for the industry.

Component	2022	2021	Proportion (2022)
Salary	AU$461k	AU$418k	85%
Other	AU$79k	AU$49k	15%
Total Compensation	AU$540k	AU$467k	100%

On an industry level, roughly 48% of total compensation represents salary and 52% is other remuneration. Senetas 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.

Senetas Corporation Limited's Growth

Senetas Corporation Limited has reduced its earnings per share by 93% a year over the last three years. In the last year, its revenue is up 9.1%.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Senetas Corporation Limited Been A Good Investment?

The return of -39% over three years would not have pleased Senetas Corporation Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

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 3 warning signs for Senetas (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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.