Yahoo Finance Is Austin Engineering Limited's (ASX:ANG) CEO Being Overpaid?
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Peter Forsyth became the CEO of Austin Engineering Limited (ASX:ANG) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Austin Engineering
How Does Peter Forsyth's Compensation Compare With Similar Sized Companies?
Our data indicates that Austin Engineering Limited is worth AU$110m, and total annual CEO compensation is AU$500k. (This figure is for the year to June 2018). Notably, the salary of AU$475k is the vast majority of the CEO compensation. We examined a group of similar sized companies, with market capitalizations of below AU$287m. The median CEO total compensation in that group is AU$352k.
Thus we can conclude that Peter Forsyth receives more in total compensation than the median of a group of companies in the same market, and of similar size to Austin Engineering Limited. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Austin Engineering has changed over time.
Is Austin Engineering Limited Growing?
On average over the last three years, Austin Engineering Limited has grown earnings per share (EPS) by 119% each year (using a line of best fit). It saw its revenue drop -7.5% over the last year.
This demonstrates that the company has been improving recently. A good result. While it would be good to see revenue growth, profits matter more in the end. Shareholders might be interested in this free visualization of analyst forecasts.
Has Austin Engineering Limited Been A Good Investment?
Most shareholders would probably be pleased with Austin Engineering Limited for providing a total return of 65% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
We compared the total CEO remuneration paid by Austin Engineering Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Austin Engineering shares (free trial).
Important note: Austin Engineering may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
