Traffic Technologies Limited's (ASX:TTI) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• Traffic Technologies to hold its Annual General Meeting on 28th of November
• Salary of AU$495.2k is part of CEO Con Liosatos's total remuneration
• The total compensation is 257% higher than the average for the industry
• Over the past three years, Traffic Technologies' EPS grew by 71% and over the past three years, the total loss to shareholders 74%

The underwhelming share price performance of Traffic Technologies Limited (ASX:TTI) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 28th of November could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Traffic Technologies

How Does Total Compensation For Con Liosatos Compare With Other Companies In The Industry?

At the time of writing, our data shows that Traffic Technologies Limited has a market capitalization of AU$8.3m, and reported total annual CEO compensation of AU$550k for the year to June 2023. That is, the compensation was roughly the same as last year. In particular, the salary of AU$495.2k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Australia Infrastructure industry with market capitalizations below AU$305m, reported a median total CEO compensation of AU$154k. Accordingly, our analysis reveals that Traffic Technologies Limited pays Con Liosatos north of the industry median. What's more, Con Liosatos holds AU$997k worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	AU$495k	AU$493k	90%
Other	AU$54k	AU$54k	10%
Total Compensation	AU$550k	AU$547k	100%

Talking in terms of the industry, salary represented approximately 46% of total compensation out of all the companies we analyzed, while other remuneration made up 54% of the pie. Traffic Technologies is paying a higher share of its remuneration through a salary in comparison to the overall 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.

A Look at Traffic Technologies Limited's Growth Numbers

Traffic Technologies Limited has seen its earnings per share (EPS) increase by 71% a year over the past three years. In the last year, its revenue is up 8.0%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Traffic Technologies Limited Been A Good Investment?

Few Traffic Technologies Limited shareholders would feel satisfied with the return of -74% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 4 warning signs for Traffic Technologies (of which 3 are significant!) that you should know about in order to have a holistic understanding of the stock.

Important note: Traffic Technologies 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.