Shareholders Will Probably Hold Off On Increasing archTIS Limited's (ASX:AR9) CEO Compensation For The Time Being
Key Insights
archTIS will host its Annual General Meeting on 23rd of November
Salary of AU$300.0k is part of CEO Daniel Lai's total remuneration
Total compensation is similar to the industry average
archTIS' EPS declined by 16% over the past three years while total shareholder loss over the past three years was 69%
Shareholders of archTIS Limited (ASX:AR9) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also poor, despite revenues growing. Shareholders will have a chance to take their concerns to the board at the next AGM on 23rd of November and vote on resolutions including executive compensation, which studies show may have an impact on company performance. Here's why we think shareholders should hold off on a raise for the CEO at the moment.
View our latest analysis for archTIS
How Does Total Compensation For Daniel Lai Compare With Other Companies In The Industry?
At the time of writing, our data shows that archTIS Limited has a market capitalization of AU$40m, and reported total annual CEO compensation of AU$447k for the year to June 2023. That's a notable increase of 14% on last year. Notably, the salary which is AU$300.0k, represents most of the total compensation being paid.
On comparing similar-sized companies in the Australian Software industry with market capitalizations below AU$307m, we found that the median total CEO compensation was AU$515k. So it looks like archTIS compensates Daniel Lai in line with the median for the industry. Furthermore, Daniel Lai directly owns AU$1.2m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | AU$300k | AU$320k | 67% |
Other | AU$147k | AU$73k | 33% |
Total Compensation | AU$447k | AU$393k | 100% |
On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. According to our research, archTIS has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
archTIS Limited's Growth
Over the last three years, archTIS Limited has shrunk its earnings per share by 16% per year. It achieved revenue growth of 37% over the last year.
The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has archTIS Limited Been A Good Investment?
The return of -69% over three years would not have pleased archTIS Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
To Conclude...
The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 5 warning signs for archTIS you should be aware of, and 2 of them are concerning.
Important note: archTIS is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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.
