What Can We Learn About DroneShield's (ASX:DRO) CEO Compensation?

Oleg Vornik became the CEO of DroneShield Limited (ASX:DRO) 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for DroneShield

How Does Total Compensation For Oleg Vornik Compare With Other Companies In The Industry?

According to our data, DroneShield Limited has a market capitalization of AU$66m, and paid its CEO total annual compensation worth AU$1.2m over the year to December 2020. That's a modest increase of 7.9% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$317k.

For comparison, other companies in the industry with market capitalizations below AU$259m, reported a median total CEO compensation of AU$654k. Hence, we can conclude that Oleg Vornik is remunerated higher than the industry median. Furthermore, Oleg Vornik directly owns AU$743k worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 51% of total compensation represents salary and 49% is other remuneration. In DroneShield's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

DroneShield Limited's Growth

Over the past three years, DroneShield Limited has seen its earnings per share (EPS) grow by 11% per year. It achieved revenue growth of 44% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 DroneShield Limited Been A Good Investment?

Given the total shareholder loss of 31% over three years, many shareholders in DroneShield Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, DroneShield Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, the EPS growth is certainly impressive, but shareholder returns — over the same period — have been disappointing. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 5 warning signs (and 2 which are potentially serious) in DroneShield we think you should know about.

Switching gears from DroneShield, 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.

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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