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In 2016 Ron Hodge was appointed CEO of InvestSMART Group Limited (ASX:INV). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for InvestSMART Group
How Does Ron Hodge’s Compensation Compare With Similar Sized Companies?
According to our data, InvestSMART Group Limited has a market capitalization of AU$17m, and pays its CEO total annual compensation worth AU$359k. (This figure is for the year to 2018). We think total compensation is more important but we note that the CEO salary is lower, at AU$264k. We examined a group of similar sized companies, with market capitalizations of below AU$282m. The median CEO compensation in that group is AU$363k.
That means Ron Hodge receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.
You can see, below, how CEO compensation at InvestSMART Group has changed over time.
Is InvestSMART Group Limited Growing?
Over the last three years InvestSMART Group Limited has shrunk its earnings per share by an average of 58% per year (measured with a line of best fit). Its revenue is down -5.4% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Although we don’t have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has InvestSMART Group Limited Been A Good Investment?
Given the total loss of 38% over three years, many shareholders in InvestSMART Group Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary…
Ron Hodge is paid around what is normal the leaders of comparable size companies.
The company isn’t growing EPS, and shareholder returns have been disappointing. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. So you may want to check if insiders are buying InvestSMART Group shares with their own money (free access).