Serko Limited's (NZSE:SKO) CEO Will Probably Find It Hard To See A Huge Raise This Year

Key Insights

• Serko's Annual General Meeting to take place on 18th of June
• Total pay for CEO Darrin Grafton includes NZ$439.2k salary
• The overall pay is comparable to the industry average
• Over the past three years, Serko's EPS grew by 25% and over the past three years, the total loss to shareholders 59%

Shareholders of Serko Limited (NZSE:SKO) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 18th of June. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

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$364m, and paid its CEO total annual compensation worth NZ$1.0m over the year to March 2024. That's a modest increase of 3.7% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at NZ$439k.

For comparison, other companies in the New Zealand Software industry with market capitalizations ranging between NZ$163m and NZ$653m had a median total CEO compensation of NZ$1.1m. So it looks like Serko compensates Darrin Grafton in line with the median for the industry. Furthermore, Darrin Grafton directly owns NZ$37m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	NZ$439k	NZ$432k	44%
Other	NZ$570k	NZ$540k	56%
Total Compensation	NZ$1.0m	NZ$973k	100%

Speaking on an industry level, nearly 55% of total compensation represents salary, while the remainder of 45% is other remuneration. Serko pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Serko Limited's Growth

Over the past three years, Serko Limited has seen its earnings per share (EPS) grow by 25% per year. It achieved revenue growth of 48% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Serko Limited Been A Good Investment?

With a total shareholder return of -59% over three years, Serko Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 1 warning sign for Serko 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.

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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.