Shareholders Will Most Likely Find Enghouse Systems Limited's (TSE:ENGH) CEO Compensation Acceptable

Performance at Enghouse Systems Limited (TSE:ENGH) has been reasonably good and CEO Steve Sadler has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 03 March 2022, 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.

View our latest analysis for Enghouse Systems

How Does Total Compensation For Steve Sadler Compare With Other Companies In The Industry?

At the time of writing, our data shows that Enghouse Systems Limited has a market capitalization of CA$2.3b, and reported total annual CEO compensation of CA$6.6m for the year to October 2021. That's slightly lower by 5.5% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at CA$729k.

In comparison with other companies in the industry with market capitalizations ranging from CA$1.3b to CA$4.1b, the reported median CEO total compensation was CA$6.0m. So it looks like Enghouse Systems compensates Steve Sadler in line with the median for the industry. Moreover, Steve Sadler also holds CA$274m worth of Enghouse Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	CA$729k	CA$693k	11%
Other	CA$5.8m	CA$6.3m	89%
Total Compensation	CA$6.6m	CA$7.0m	100%

On an industry level, around 91% of total compensation represents salary and 9% is other remuneration. In Enghouse Systems' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Enghouse Systems Limited's Growth Numbers

Enghouse Systems Limited has seen its earnings per share (EPS) increase by 16% a year over the past three years. Its revenue is down 7.3% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Enghouse Systems Limited Been A Good Investment?

Enghouse Systems Limited has served shareholders reasonably well, with a total return of 16% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Enghouse Systems 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.