Here's Why We Think Multistack International Limited's (ASX:MSI) CEO Compensation Looks Fair

Key Insights

• Multistack International's Annual General Meeting to take place on 14th of May

• CEO Stephen Leung's total compensation includes salary of AU$84.7k

• The overall pay is 42% below the industry average

• Over the past three years, Multistack International's EPS fell by 28% and over the past three years, the total loss to shareholders 75%

Shareholders may be wondering what CEO Stephen Leung plans to do to improve the less than great performance at Multistack International Limited (ASX:MSI) recently. At the next AGM coming up on 14th of May, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.

Check out our latest analysis for Multistack International

How Does Total Compensation For Stephen Leung Compare With Other Companies In The Industry?

At the time of writing, our data shows that Multistack International Limited has a market capitalization of AU$1.8m, and reported total annual CEO compensation of AU$85k for the year to December 2023. That's just a smallish increase of 4.1% on last year. Notably, the salary of AU$85k is the entirety of the CEO compensation.

For comparison, other companies in the Australian Trade Distributors industry with market capitalizations below AU$303m, reported a median total CEO compensation of AU$145k. That is to say, Stephen Leung is paid under the industry median. Moreover, Stephen Leung also holds AU$369k worth of Multistack International stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the broader industry, salary and other compensation roughly make up 50% each, of the total compensation. At the company level, Multistack International pays Stephen Leung solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Multistack International Limited's Growth

Over the last three years, Multistack International Limited has shrunk its earnings per share by 28% per year. Its revenue is up 179% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Multistack International Limited Been A Good Investment?

The return of -75% over three years would not have pleased Multistack International Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Multistack International pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. The loss to shareholders over the past three years is certainly concerning. The downward trend in share price performance may be attributable to the the fact that earnings growth has gone backwards. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 6 warning signs for Multistack International you should be aware of, and 5 of them are potentially serious.

Switching gears from Multistack International, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.