Xero, an accounting software firm that provides cloud-based solutions to small and medium-sized businesses, is currently valued at $13.6 billion. Its chairman, David Thodi, has been actively meeting with investors to discuss revitalization of chief executive Sukhender Singh Cassidy’s remuneration package. It comes after a tough year for shareholders, which saw Xero’s share price drop 60 percent, wiping $14 billion off its market capitalization. The decline is largely due to broader concerns over AI disruption and a significant selloff in technology stocks, colloquially known as the “SaaPocalypse.”
Singh Cassidy’s December 2024 initial target compensation was set at $15.2 million ($23.5 million AUD), excluding a one-time grant of 575,000 options with an initial fair value of $26.5 million. Those options, struck at an exercise price of $171.11, are now nearly worthless, as Xero’s shares were recently trading around $73.74. Thodey’s campaign aims to adjust his compensation to ensure that Singh Cassidy retains a stake equal to 1 percent of the company’s market capitalization, seeking to bolster his Silicon Valley-style pay despite the declining share price.
However, some investors are reportedly wary of increasing executive compensation, arguing that while compensation should encourage growth, it should also reflect poor shareholder experience over the past year. “There is a legitimate tension if the share price continues to fall and compensation remains high,” noted Haley Kim, senior investment analyst at Wilson Asset Management. Xero’s board claims that 96 percent of Singh Cassidy’s pay is performance-based and linked to Xero’s global financial and shareholder return results, benchmarking executive roles against global peers to attract and retain world-class leadership in a competitive market.
The company has previously faced scrutiny over its remuneration practices, with its report avoiding a “second strike” at last year’s annual general meeting, although as a New Zealand resident entity, it is not strictly subject to the rule. Despite investor skepticism about Xero’s $4 billion acquisition of vendor finance company Melio last year, broker E&P suggests Xero is gaining traction in the US. The broker indicates that Xero is benefiting from growing consumer frustration with the likes of Intuit-owned Quickbooks, possibly signaling better opportunities in the US market.
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