Should You Worry About SDI Limited's (ASX:SDI) CEO Pay Cheque?

Samantha Cheetham has been the CEO of SDI Limited (ASX:SDI) since 2016. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for SDI

How Does Samantha Cheetham's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that SDI Limited has a market cap of AU$101m, and reported total annual CEO compensation of AU$620k for the year to June 2019. Notably, that's an increase of 19% over the year before. We think total compensation is more important but we note that the CEO salary is lower, at AU$471k. We took a group of companies with market capitalizations below AU$291m, and calculated the median CEO total compensation to be AU$380k.

Thus we can conclude that Samantha Cheetham receives more in total compensation than the median of a group of companies in the same market, and of similar size to SDI Limited. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at SDI has changed over time.

ASX:SDI CEO Compensation, December 16th 2019
ASX:SDI CEO Compensation, December 16th 2019

Is SDI Limited Growing?

SDI Limited has increased its earnings per share (EPS) by an average of 2.4% a year, over the last three years (using a line of best fit). It achieved revenue growth of 6.8% over the last year.

I'm not particularly impressed by the revenue growth, but the modest improvement in EPS is good. Considering these factors I'd say performance has been pretty decent, though not amazing. Although we don't have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has SDI Limited Been A Good Investment?

SDI Limited has generated a total shareholder return of 32% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

We compared total CEO remuneration at SDI Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. Considering this, we wouldn't want to see any big pay rises, although we'd stop short of calling the CEO compensation unfair. Shareholders may want to check for free if SDI insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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