Why We Think Volt Power Group Limited's (ASX:VPR) CEO Compensation Is Not Excessive At All

CEO Adam Boyd has done a decent job of delivering relatively good performance at Volt Power Group Limited (ASX:VPR) recently. As shareholders go into the upcoming AGM on 07 May 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. We present our case of why we think CEO compensation looks fair.

See our latest analysis for Volt Power Group

How Does Total Compensation For Adam Boyd Compare With Other Companies In The Industry?

Our data indicates that Volt Power Group Limited has a market capitalization of AU$32m, and total annual CEO compensation was reported as AU$360k for the year to December 2020. We note that's a small decrease of 6.5% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth AU$360k.

For comparison, other companies in the industry with market capitalizations below AU$257m, reported a median total CEO compensation of AU$360k. This suggests that Volt Power Group remunerates its CEO largely in line with the industry average. What's more, Adam Boyd holds AU$4.8m 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$360k	AU$360k	100%
Other	-	AU$25k	-
Total Compensation	AU$360k	AU$385k	100%

On an industry level, around 83% of total compensation represents salary and 17% is other remuneration. On a company level, Volt Power Group prefers to reward its CEO through a salary, opting not to pay Adam Boyd through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Volt Power Group Limited's Growth

Volt Power Group Limited has reduced its earnings per share by 36% a year over the last three years. In the last year, its revenue is up 65%.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Volt Power Group Limited Been A Good Investment?

We think that the total shareholder return of 50%, over three years, would leave most Volt Power Group Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Volt Power Group pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Although the company has performed relatively well, we still think there are some areas that could be improved. We reckon that there are some shareholders who may be hesitant to increase CEO pay further until EPS growth starts to improve, despite the robust revenue growth.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 1 which is significant) in Volt Power Group we think you should know about.

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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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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