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In 2014 Andrew Elf was appointed CEO of Mitchell Services Limited (ASX:MSV). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Andrew Elf’s Compensation Compare With Similar Sized Companies?
Our data indicates that Mitchell Services Limited is worth AU$85m, and total annual CEO compensation is AU$612k. (This number is for the twelve months until 2018). While we always look at total compensation first, we note that the salary component is less, at AU$320k. We examined a group of similar sized companies, with market capitalizations of below AU$279m. The median CEO compensation in that group is AU$362k.
Thus we can conclude that Andrew Elf receives more in total compensation than the median of a group of companies in the same market, and of similar size to Mitchell Services Limited. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Mitchell Services, below.
Is Mitchell Services Limited Growing?
Over the last three years Mitchell Services Limited has grown its earnings per share (EPS) by an average of 86% per year (using a line of best fit). In the last year, its revenue is up 80%.
This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Although we don’t have analyst forecasts, you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Mitchell Services Limited Been A Good Investment?
I think that the total shareholder return of 189%, over three years, would leave most Mitchell Services Limited shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
We examined the amount Mitchell Services Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. 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. So you may want to check if insiders are buying Mitchell Services shares with their own money (free access).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity 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 email@example.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.