Jeff Lai became the CEO of Vortiv Limited (ASX:VOR) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Vortiv pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Vortiv
How Does Total Compensation For Jeff Lai Compare With Other Companies In The Industry?
Our data indicates that Vortiv Limited has a market capitalization of AU$32m, and total annual CEO compensation was reported as AU$200k for the year to March 2020. Notably, that's a decrease of 30% over the year before. In particular, the salary of AU$183.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$279m, we found that the median total CEO compensation was AU$356k. Accordingly, Vortiv pays its CEO under the industry median. What's more, Jeff Lai holds AU$114k worth of shares in the company in their own name.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$183k | AU$183k | 92% |
| Other | AU$17k | AU$101k | 9% |
| Total Compensation | AU$200k | AU$284k | 100% |
On an industry level, roughly 78% of total compensation represents salary and 22% is other remuneration. According to our research, Vortiv has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Vortiv Limited's Growth
Vortiv Limited has seen its earnings per share (EPS) increase by 136% a year over the past three years. In the last year, its revenue is up 98%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Vortiv Limited Been A Good Investment?
With a total shareholder return of 28% over three years, Vortiv Limited shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
As we noted earlier, Vortiv pays its CEO lower than the norm for similar-sized companies belonging to the same industry. But over the last three years, earnings growth has been growing rapidly, which is a great sign for the company. Shareholder returns, in comparison, have not been as impressive. Shareholder returns could be better but we're pleased with the positive EPS growth. So considering these factors, we think Jeff is modestly compensated.