We Discuss Why Hubify Limited's (ASX:HFY) CEO Will Find It Hard To Get A Pay Rise From Shareholders This Year

Key Insights

• Hubify will host its Annual General Meeting on 24th of October
• Salary of AU$255.6k is part of CEO Victor Tsaccounis's total remuneration
• Total compensation is 47% below industry average
• Over the past three years, Hubify's EPS fell by 48% and over the past three years, the total loss to shareholders 79%

Performance at Hubify Limited (ASX:HFY) has not been particularly rosy recently and shareholders will likely be holding CEO Victor Tsaccounis and the board accountable for this. The next AGM coming up on 24th of October will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. From our analysis below, we think CEO compensation looks appropriate for now.

View our latest analysis for Hubify

How Does Total Compensation For Victor Tsaccounis Compare With Other Companies In The Industry?

At the time of writing, our data shows that Hubify Limited has a market capitalization of AU$9.9m, and reported total annual CEO compensation of AU$355k for the year to June 2023. We note that's an increase of 12% above last year. We note that the salary portion, which stands at AU$255.6k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Australian Telecom industry with market capitalizations below AU$314m, reported a median total CEO compensation of AU$676k. Accordingly, Hubify pays its CEO under the industry median. Furthermore, Victor Tsaccounis directly owns AU$1.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	AU$256k	AU$250k	72%
Other	AU$99k	AU$66k	28%
Total Compensation	AU$355k	AU$316k	100%

On an industry level, roughly 45% of total compensation represents salary and 55% is other remuneration. Hubify pays out 72% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Hubify Limited's Growth Numbers

Over the last three years, Hubify Limited has shrunk its earnings per share by 48% per year. Its revenue is up 4.8% over the last year.

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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hubify Limited Been A Good Investment?

With a total shareholder return of -79% over three years, Hubify Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Hubify that you should be aware of before investing.

Important note: Hubify 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. 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.