Our View On Cobalt Blue Holdings' (ASX:COB) CEO Pay

Joe Kaderavek became the CEO of Cobalt Blue Holdings Limited (ASX:COB) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Cobalt Blue Holdings

How Does Total Compensation For Joe Kaderavek Compare With Other Companies In The Industry?

According to our data, Cobalt Blue Holdings Limited has a market capitalization of AU$25m, and paid its CEO total annual compensation worth AU$450k over the year to June 2020. That's a notable decrease of 12% on last year. In particular, the salary of AU$304.4k, 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$281m, reported a median total CEO compensation of AU$312k. Hence, we can conclude that Joe Kaderavek is remunerated higher than the industry median. Moreover, Joe Kaderavek also holds AU$409k worth of Cobalt Blue Holdings stock directly under their own name.

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. There isn't a significant difference between Cobalt Blue Holdings and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Cobalt Blue Holdings Limited's Growth

Cobalt Blue Holdings Limited has seen its earnings per share (EPS) increase by 4.4% a year over the past three years. Its revenue is up 77% over the last year.

We like the look of the strong year-on-year improvement in revenue. Combined with modest EPS growth, we get a good impression of the company. We'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Cobalt Blue Holdings Limited Been A Good Investment?

Given the total shareholder loss of 46% over three years, many shareholders in Cobalt Blue Holdings Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we touched on above, Cobalt Blue Holdings Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The growth in the business has been uninspiring, but the shareholder returns for Cobalt Blue Holdings have arguably been worse, over the last three years. And the situation doesn't look all that good when you see Joe is remunerated higher than the industry average. All things considered, we believe shareholders would be disappointed to see Joe's compensation grow without first seeing an improvement in the performance of the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for Cobalt Blue Holdings you should be aware of, and 2 of them make us uncomfortable.

Important note: Cobalt Blue Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.