How Does EROAD's (NZSE:ERD) CEO Pay Compare With Company Performance?

Steven Newman has been the CEO of EROAD Limited (NZSE:ERD) since 2007, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for EROAD

Comparing EROAD Limited's CEO Compensation With the industry

According to our data, EROAD Limited has a market capitalization of NZ$431m, and paid its CEO total annual compensation worth NZ$1.0m over the year to March 2020. Notably, that's an increase of 39% over the year before. In particular, the salary of NZ$590.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations ranging from NZ$279m to NZ$1.1b, the reported median CEO total compensation was NZ$768k. This suggests that Steven Newman is paid more than the median for the industry. Furthermore, Steven Newman directly owns NZ$631k worth of shares in the company.

On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. Although there is a difference in how total compensation is set, EROAD more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at EROAD Limited's Growth Numbers

Over the past three years, EROAD Limited has seen its earnings per share (EPS) grow by 92% per year. It achieved revenue growth of 24% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has EROAD Limited Been A Good Investment?

With a total shareholder return of 32% over three years, EROAD Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

As we touched on above, EROAD Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the company has impressed us with its EPS growth, over three years. Looking at the same time period, we think that the shareholder returns are respectable. So, considering the EPS growth we do not wish to criticize CEO compensation, though we'd recommend further research on management.

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 EROAD that you should be aware of before investing.

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.

If you decide to trade EROAD, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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