Our Take On Serko's (NZSE:SKO) CEO Salary

The CEO of Serko Limited (NZSE:SKO) is Darrin Grafton, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Serko

How Does Total Compensation For Darrin Grafton Compare With Other Companies In The Industry?

According to our data, Serko Limited has a market capitalization of NZ$596m, and paid its CEO total annual compensation worth NZ$527k over the year to March 2020. We note that's a decrease of 17% compared to last year. In particular, the salary of NZ$370.6k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between NZ$274m and NZ$1.1b, we discovered that the median CEO total compensation of that group was NZ$1.2m. In other words, Serko pays its CEO lower than the industry median. Furthermore, Darrin Grafton directly owns NZ$62m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. It's interesting to note that Serko allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Serko Limited's Growth

Serko Limited has reduced its earnings per share by 122% a year over the last three years. It saw its revenue drop 39% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Serko Limited Been A Good Investment?

We think that the total shareholder return of 195%, over three years, would leave most Serko Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As we noted earlier, Serko pays its CEO lower than the norm for similar-sized companies belonging to the same industry. And although the company is suffering from declining EPS growth over the past three years, shareholder returns remain strong. Although we'd like to see positive EPS growth, we'd argue the remuneration is modest, based on our observations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Serko that you should be aware of before investing.

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.

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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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