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

Paul Burton is the CEO of TNG Limited (ASX:TNG), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether TNG pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for TNG

How Does Total Compensation For Paul Burton Compare With Other Companies In The Industry?

At the time of writing, our data shows that TNG Limited has a market capitalization of AU$141m, and reported total annual CEO compensation of AU$601k for the year to June 2020. That's a notable increase of 15% on last year. We note that the salary portion, which stands at AU$505.3k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under AU$281m, the reported median total CEO compensation was AU$306k. Hence, we can conclude that Paul Burton is remunerated higher than the industry median. Furthermore, Paul Burton directly owns AU$958k worth of shares in the company.

On an industry level, around 69% of total compensation represents salary and 31% is other remuneration. TNG pays out 84% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at TNG Limited's Growth Numbers

Over the past three years, TNG Limited has seen its earnings per share (EPS) grow by 23% per year. In the last year, its revenue is down 63%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has TNG Limited Been A Good Investment?

With a three year total loss of 10% for the shareholders, TNG Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, TNG pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, the EPS growth is certainly impressive, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Although we'd stop short of calling it inappropriate, we think Paul is earning a very handsome sum.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for TNG you should be aware of, and 1 of them makes us a bit uncomfortable.

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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