Tom Tonavanik has been the CEO of SportsHero Limited (ASX:SHO) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for SportsHero.

See our latest analysis for SportsHero

Comparing SportsHero Limited's CEO Compensation With the industry

According to our data, SportsHero Limited has a market capitalization of AU$9.0m, and paid its CEO total annual compensation worth US$112k over the year to June 2020. We note that's a decrease of 17% compared to last year. Notably, the salary of US$112k is the entirety of the CEO compensation.

For comparison, other companies in the industry with market capitalizations below AU$284m, reported a median total CEO compensation of US$177k. This suggests that Tom Tonavanik is paid below the industry median. What's more, Tom Tonavanik holds AU$330k worth of shares in the company in their own name.

Talking in terms of the industry, salary represented approximately 90% of total compensation out of all the companies we analyzed, while other remuneration made up 10% of the pie. At the company level, SportsHero pays Tom Tonavanik solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

SportsHero Limited's Growth

Over the past three years, SportsHero Limited has seen its earnings per share (EPS) grow by 61% per year. Its revenue is down 89% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. 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 SportsHero Limited Been A Good Investment?

Since shareholders would have lost about 60% over three years, some SportsHero Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

SportsHero pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we noted earlier, SportsHero pays its CEO lower than the norm for similar-sized companies belonging to the same industry. However, the EPS growth over three years is certainly impressive. Considering EPS are on the up, we would say Tom is compensated fairly. Shareholders, though, would ideally like to see shareholder returns head north before they agree to any raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for SportsHero (of which 2 are concerning!) that you should know about in order to have a holistic understanding of the 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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