Shareholders May Find It Hard To Justify Increasing Comms Group Limited's (ASX:CCG) CEO Compensation For Now

Key Insights

• Comms Group will host its Annual General Meeting on 21st of November
• Salary of AU$318.8k is part of CEO Peter McGrath's total remuneration
• Total compensation is similar to the industry average
• Comms Group's EPS declined by 124% over the past three years while total shareholder loss over the past three years was 38%

The underwhelming share price performance of Comms Group Limited (ASX:CCG) in the past three years would have disappointed many shareholders. Per share earnings growth is also poor, despite revenues growing. Shareholders will have a chance to take their concerns to the board at the next AGM on 21st of November and vote on resolutions including executive compensation, which studies show may have an impact on company performance. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

View our latest analysis for Comms Group

How Does Total Compensation For Peter McGrath Compare With Other Companies In The Industry?

According to our data, Comms Group Limited has a market capitalization of AU$23m, and paid its CEO total annual compensation worth AU$714k over the year to June 2023. Notably, that's an increase of 33% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$319k.

On comparing similar-sized companies in the Australian Telecom industry with market capitalizations below AU$314m, we found that the median total CEO compensation was AU$681k. From this we gather that Peter McGrath is paid around the median for CEOs in the industry. Furthermore, Peter McGrath directly owns AU$1.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	AU$319k	AU$293k	45%
Other	AU$395k	AU$242k	55%
Total Compensation	AU$714k	AU$535k	100%

On an industry level, roughly 45% of total compensation represents salary and 55% is other remuneration. Although there is a difference in how total compensation is set, Comms Group more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Comms Group Limited's Growth Numbers

Over the last three years, Comms Group Limited has shrunk its earnings per share by 124% per year. Its revenue is up 26% over the last year.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Comms Group Limited Been A Good Investment?

The return of -38% over three years would not have pleased Comms Group Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Comms Group that investors should look into moving forward.

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.