We Discuss Why Sarine Technologies Ltd.'s (SGX:U77) CEO Compensation May Be Closely Reviewed

The results at Sarine Technologies Ltd. (SGX:U77) have been quite disappointing recently and CEO David Block 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 April 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Sarine Technologies

Comparing Sarine Technologies Ltd.'s CEO Compensation With the industry

Our data indicates that Sarine Technologies Ltd. has a market capitalization of S$208m, and total annual CEO compensation was reported as US$521k for the year to December 2020. We note that's an increase of 9.6% above last year. Notably, the salary which is US$291.5k, represents a considerable chunk of the total compensation being paid.

On examining similar-sized companies in the industry with market capitalizations between S$133m and S$532m, we discovered that the median CEO total compensation of that group was US$162k. Accordingly, our analysis reveals that Sarine Technologies Ltd. pays David Block north of the industry median.

Component	2020	2019	Proportion (2020)
Salary	US$291k	US$304k	56%
Other	US$229k	US$171k	44%
Total Compensation	US$521k	US$475k	100%

Speaking on an industry level, nearly 60% of total compensation represents salary, while the remainder of 40% is other remuneration. Our data reveals that Sarine Technologies allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Sarine Technologies Ltd.'s Growth

Over the last three years, Sarine Technologies Ltd. has shrunk its earnings per share by 26% per year. Its revenue is down 20% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Sarine Technologies Ltd. Been A Good Investment?

Few Sarine Technologies Ltd. shareholders would feel satisfied with the return of -37% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. 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 pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Sarine Technologies (1 doesn't sit too well with us!) that you should be aware of before investing here.

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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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