De.mem Limited's (ASX:DEM) CEO Will Probably Have Their Compensation Approved By Shareholders

It would be hard to discount the role that CEO Andreas Kroell has played in delivering the impressive results at De.mem Limited (ASX:DEM) recently. Coming up to the next AGM on 25 May 2021, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

See our latest analysis for De.mem

How Does Total Compensation For Andreas Kroell Compare With Other Companies In The Industry?

According to our data, De.mem Limited has a market capitalization of AU$58m, and paid its CEO total annual compensation worth AU$388k over the year to December 2020. We note that's an increase of 47% above last year. In particular, the salary of AU$276.3k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below AU$258m, reported a median total CEO compensation of AU$407k. This suggests that De.mem remunerates its CEO largely in line with the industry average. Furthermore, Andreas Kroell directly owns AU$884k worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 41% of total compensation out of all the companies we analyzed, while other remuneration made up 59% of the pie. According to our research, De.mem has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at De.mem Limited's Growth Numbers

Over the past three years, De.mem Limited has seen its earnings per share (EPS) grow by 48% per year. In the last year, its revenue is up 40%.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has De.mem Limited Been A Good Investment?

Boasting a total shareholder return of 83% over three years, De.mem Limited 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.

In Summary...

Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. In saying that, some shareholders may feel that the more important issues to be addressed may be how the management plans to steer the company towards sustainable profitability in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 3 warning signs for De.mem that investors should look into moving forward.

Switching gears from De.mem, 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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