Is Solution Dynamics Limited’s (NZSE:SDL) CEO Salary Justified?

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Siva Sivasubramaniam has been the CEO of Solution Dynamics Limited (NZSE:SDL) since 2006. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Solution Dynamics

How Does Siva Sivasubramaniam’s Compensation Compare With Similar Sized Companies?

Our data indicates that Solution Dynamics Limited is worth NZ$24m, and total annual CEO compensation is NZ$413k. (This number is for the twelve months until June 2018). Notably, the salary of NZ$413k is the vast majority of the CEO compensation. We examined a group of similar sized companies, with market capitalizations of below NZ$303m. The median CEO total compensation in that group is NZ$13k.

Thus we can conclude that Siva Sivasubramaniam receives more in total compensation than the median of a group of companies in the same market, and of similar size to Solution Dynamics Limited. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at Solution Dynamics has changed over time.

NZSE:SDL CEO Compensation, May 10th 2019
NZSE:SDL CEO Compensation, May 10th 2019

Is Solution Dynamics Limited Growing?

Solution Dynamics Limited has increased its earnings per share (EPS) by an average of 3.9% a year, over the last three years (using a line of best fit). Its revenue is up 15% over last year.

This revenue growth could really point to a brighter future. And the modest growth in earnings per share isn’t bad, either. Although we’ll stop short of calling the stock a top performer, we think the company has potential. We don’t have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Solution Dynamics Limited Been A Good Investment?

Since shareholders would have lost about 24% over three years, some Solution Dynamics Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We examined the amount Solution Dynamics Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Considering this, we have the opinion that the CEO pay is more on the generous side, than the modest side. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Solution Dynamics.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.