Here's What We Learned About The CEO Pay At De.mem Limited (ASX:DEM)

Andreas Kroell became the CEO of De.mem Limited (ASX:DEM) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for De.mem.

View our latest analysis for De.mem

Comparing De.mem Limited's CEO Compensation With the industry

Our data indicates that De.mem Limited has a market capitalization of AU$44m, and total annual CEO compensation was reported as AU$264k for the year to December 2019. We note that's an increase of 27% above last year. In particular, the salary of AU$227.2k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under AU$264m, the reported median total CEO compensation was AU$378k. That is to say, Andreas Kroell is paid under the industry median. What's more, Andreas Kroell holds AU$787k worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 42% of total compensation represents salary and 58% is other remuneration. It's interesting to note that De.mem pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

De.mem Limited's Growth

De.mem Limited has seen its earnings per share (EPS) increase by 34% a year over the past three years. It achieved revenue growth of 53% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has De.mem Limited Been A Good Investment?

Since shareholders would have lost about 3.0% over three years, some De.mem Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As previously discussed, Andreas is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth over three years is certainly impressive. Although we would've liked to see positive investor returns, it would be bold of us to criticize CEO compensation when EPS are up. But shareholders will likely want to hold off on any raise for Andreas until investor returns are positive.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for De.mem that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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