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Stephen Sadler became the CEO of Enghouse Systems Limited (TSE:ENGH) in 2000. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Stephen Sadler's Compensation Compare With Similar Sized Companies?
According to our data, Enghouse Systems Limited has a market capitalization of CA$1.9b, and pays its CEO total annual compensation worth CA$4.6m. (This number is for the twelve months until October 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CA$615k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$1.3b to CA$4.2b. The median total CEO compensation was CA$2.6m.
It would therefore appear that Enghouse Systems Limited pays Stephen Sadler more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Enghouse Systems has changed from year to year.
Is Enghouse Systems Limited Growing?
Over the last three years Enghouse Systems Limited has grown its earnings per share (EPS) by an average of 14% per year (using a line of best fit). It achieved revenue growth of 3.1% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.
Has Enghouse Systems Limited Been A Good Investment?
Boasting a total shareholder return of 34% over three years, Enghouse Systems 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.
We compared total CEO remuneration at Enghouse Systems Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Enghouse Systems (free visualization of insider trades).
Important note: Enghouse Systems may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.