Xero Ltd (ASX: XRO) shares are underperforming on Wednesday.
At the time of writing, the cloud accounting platform provider's shares are down slightly to $170.86.
What's going on with Xero shares?
This morning, Xero released an announcement relating to the remuneration of its CEO, Sukhinder Singh Cassidy.
According to the release, the company has lifted Singh Cassidy's remuneration in order to recognise her strong performance and ensure that it is appropriately aligned to market benchmarks for globally comparable technology companies and that Xero continues to focus on incentivising long-term value creation.
The release notes that since joining Xero in November 2022 and commencing as CEO in February 2023, Singh Cassidy has consistently delivered revenue growth above 20%, increased its free cash flow margin to 21%, and delivered a Rule of 40 of 41% and 43.9% in FY 2024 and the first half of FY 2025, respectively. This has led to a total shareholder return (TSR) of 161% over the period.
Following a review, the board has brought the Xero CEO's compensation in line with a benchmark group by moving future total target remuneration (TTR) (base salary, STI, LTE and LTI) from the 10th percentile to the median, and granting a top-up allocation of options to bring her total equity exposure to the median of the group. The latter excludes founder CEOs.
This benchmark group comprises US-based CEOs of globally comparable companies in the technology sector. This includes Okta (NASDAQ: OKTA), Twilio (NYSE: TWLO), Atlassian (NASDAQ: TEAM), and MongoDB (NASDAQ: MDB).
While this will see Singh Cassidy's base salary and associated target STI reduce from US$735,000 to US$540,000 each from 1 April, the overall total target remuneration (including LTIs and LTEs) will increase to US$15.2 million.
In addition, a one-off grant of 575,000 at-the-money options with an exercise price of A$171.11, equal to a fair value of US$26.49 million will be granted. Xero notes that the granting of these share options is being done to align CEO and shareholder interests.
'An exceptional contribution'
Commenting on the arrangement, Xero's chair, David Thodey, said:
The Board is committed to linking pay with performance, and attracting and retaining global talent to achieve our global strategy and aspirations for Xero. Sukhinder has made an exceptional contribution towards these ambitions since joining Xero two years ago.
Under Sukhinders leadership, Xero has focused the team on delivering growth and profitability, attracted leading global expertise, set out a clear strategic vision to position Xero strongly for the future, and delivered consecutive greater than Rule of 40 outcomes.
