Shareholders May Be Wary Of Increasing Saferoads Holdings Limited's (ASX:SRH) CEO Compensation Package

Shareholders will probably not be too impressed with the underwhelming results at Saferoads Holdings Limited (ASX:SRH) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 28 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. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Saferoads Holdings

Comparing Saferoads Holdings Limited's CEO Compensation With The Industry

According to our data, Saferoads Holdings Limited has a market capitalization of AU$4.5m, and paid its CEO total annual compensation worth AU$422k over the year to June 2022. This means that the compensation hasn't changed much from last year. Notably, the salary which is AU$367.2k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below AU$299m, reported a median total CEO compensation of AU$224k. Accordingly, our analysis reveals that Saferoads Holdings Limited pays Darren Hotchkin north of the industry median. Moreover, Darren Hotchkin also holds AU$1.2m worth of Saferoads Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	AU$367k	AU$360k	87%
Other	AU$55k	AU$53k	13%
Total Compensation	AU$422k	AU$413k	100%

Talking in terms of the industry, salary represented approximately 52% of total compensation out of all the companies we analyzed, while other remuneration made up 48% of the pie. It's interesting to note that Saferoads Holdings pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Saferoads Holdings Limited's Growth

Over the last three years, Saferoads Holdings Limited has shrunk its earnings per share by 5.3% per year. In the last year, its revenue is down 6.8%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Saferoads Holdings Limited Been A Good Investment?

The return of -30% over three years would not have pleased Saferoads Holdings Limited shareholders. 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 pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 5 warning signs for Saferoads Holdings you should be aware of, and 4 of them are potentially serious.

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.