Darren Hotchkin has been the CEO of Saferoads Holdings Limited (ASX:SRH) since 2012, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Saferoads Holdings.
View our latest analysis for Saferoads Holdings
How Does Total Compensation For Darren Hotchkin Compare With Other Companies In The Industry?
At the time of writing, our data shows that Saferoads Holdings Limited has a market capitalization of AU$9.0m, and reported total annual CEO compensation of AU$346k for the year to June 2020. We note that's a small decrease of 4.4% on last year. In particular, the salary of AU$303.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below AU$254m, reported a median total CEO compensation of AU$273k. From this we gather that Darren Hotchkin is paid around the median for CEOs in the industry. What's more, Darren Hotchkin holds AU$2.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$303k | AU$323k | 88% |
| Other | AU$43k | AU$38k | 12% |
| Total Compensation | AU$346k | AU$362k | 100% |
Talking in terms of the broader industry, salary and other compensation roughly make up 50% each, of the total compensation. Saferoads Holdings 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.
A Look at Saferoads Holdings Limited's Growth Numbers
Saferoads Holdings Limited's earnings per share (EPS) grew 64% per year over the last three years. It saw its revenue drop 8.0% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. 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?
With a total shareholder return of 26% over three years, Saferoads Holdings Limited shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
As we noted earlier, Saferoads Holdings pays its CEO in line with similar-sized companies belonging to the same industry. But EPS growth for the company has been strong over the last three years, though shareholder returns in comparison haven't been as impressive. So considering these factors, we think the compensation is probably quite reasonable, but investor returns need a boost moving forward.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for Saferoads Holdings you should be aware of, and 2 of them are a bit concerning.
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. 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.
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About ASX:SRH
Saferoads Holdings
Provides road safety products and solutions in Australia, New Zealand, and the United States.
Slight with mediocre balance sheet.
