This article will reflect on the compensation paid to Jonathan Rubinsztein who has served as CEO of Infomedia Ltd (ASX:IFM) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Infomedia Ltd's CEO Compensation With the industry
Our data indicates that Infomedia Ltd has a market capitalization of AU$606m, and total annual CEO compensation was reported as AU$1.1m for the year to June 2020. We note that's a decrease of 14% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$507k.
On examining similar-sized companies in the industry with market capitalizations between AU$281m and AU$1.1b, we discovered that the median CEO total compensation of that group was AU$1.1m. So it looks like Infomedia compensates Jonathan Rubinsztein in line with the median for the industry. Moreover, Jonathan Rubinsztein also holds AU$5.4m worth of Infomedia stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. Infomedia pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Infomedia Ltd's Growth
Over the past three years, Infomedia Ltd has seen its earnings per share (EPS) grow by 14% per year. It achieved revenue growth of 12% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Infomedia Ltd Been A Good Investment?
Boasting a total shareholder return of 123% over three years, Infomedia Ltd has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As previously discussed, Jonathan is compensated close to the median for companies of its size, and which belong to the same industry. Investors would surely be happy to see that returns have been great, and that EPS is up. So one could argue that CEO compensation is quite modest, if you consider company performance! In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Infomedia that investors should think about before committing capital to this stock.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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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