Stock Analysis

Here's Why Shareholders Should Examine CAP-XX Limited's (LON:CPX) CEO Compensation Package More Closely

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The results at CAP-XX Limited (LON:CPX) have been quite disappointing recently and CEO Anthony Kongats bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 27 October 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for CAP-XX

Comparing CAP-XX Limited's CEO Compensation With the industry

At the time of writing, our data shows that CAP-XX Limited has a market capitalization of UK£26m, and reported total annual CEO compensation of AU$381k for the year to June 2021. Notably, that's a decrease of 29% over the year before. Notably, the salary which is AU$322.1k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under UK£145m, the reported median total CEO compensation was AU$381k. So it looks like CAP-XX compensates Anthony Kongats in line with the median for the industry. What's more, Anthony Kongats holds UK£742k worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20212020Proportion (2021)
Salary AU$322k AU$322k 85%
Other AU$59k AU$215k 15%
Total CompensationAU$381k AU$537k100%

On an industry level, roughly 83% of total compensation represents salary and 17% is other remuneration. There isn't a significant difference between CAP-XX and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

AIM:CPX CEO Compensation October 20th 2021

A Look at CAP-XX Limited's Growth Numbers

Over the last three years, CAP-XX Limited has shrunk its earnings per share by 8.5% per year. In the last year, its revenue is up 14%.

Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has CAP-XX Limited Been A Good Investment?

Few CAP-XX Limited shareholders would feel satisfied with the return of -47% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 5 warning signs (and 1 which makes us a bit uncomfortable) in CAP-XX we think you should know about.

Important note: CAP-XX 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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Find out whether CAP-XX is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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