Does Velpic Limited’s (ASX:VPC) CEO Pay Reflect Performance?
Felix Olson May 23, 2018
Russell Francis is the CEO of Velpic Limited (ASX:VPC), which has recently grown to a market capitalization of AU$5.65M. Understanding how CEOs are incentivised to run and grow their company is an important aspect of investing in a stock. This is because, if incentives are aligned, more value is created for shareholders which directly impacts your returns as an investor. Today we will assess Francis’s pay and compare this to the company’s performance over the same period, as well as measure it against other Australian CEOs leading companies of similar size and profitability.
What has been the trend in VPC’s earnings?
VPC can create value to shareholders by increasing its profitability, which in turn is reflected into the share price and the investor’s ability to sell their shares at higher capital gains. Recently, VPC delivered negative earnings of -AU$8.44M , which is a further decline from prior year’s loss of -AU$3.90M. Additionally, on average, VPC has been loss-making in the past, with a 5-year average EPS of -AU$0.018. During times of negative earnings, the company may be incurring a period of reinvestment and growth, or it can be a sign of some headwind. Regardless, CEO compensation should represent the current state of the business. From the latest report, Francis’s total compensation rose by 55.88% to AU$315.24K.
