Yahoo Finance Here's What We Learned About The CEO Pay At Altium Limited (ASX:ALU)
Aram Mirkazemi became the CEO of Altium Limited (ASX:ALU) in 2014, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Altium
Comparing Altium Limited's CEO Compensation With the industry
At the time of writing, our data shows that Altium Limited has a market capitalization of AU$3.6b, and reported total annual CEO compensation of US$1.7m for the year to June 2020. That's a notable decrease of 45% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$500k.
For comparison, other companies in the same industry with market capitalizations ranging between AU$2.5b and AU$8.1b had a median total CEO compensation of US$3.6m. This suggests that Aram Mirkazemi is paid below the industry median. What's more, Aram Mirkazemi holds AU$256m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$500k | US$500k | 29% |
Other | US$1.2m | US$2.6m | 71% |
Total Compensation | US$1.7m | US$3.1m | 100% |
Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. Altium sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Altium Limited's Growth Numbers
Over the last three years, Altium Limited has shrunk its earnings per share by 5.1% per year. Its revenue is up 5.2% over the last year.
Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Altium Limited Been A Good Investment?
Boasting a total shareholder return of 33% over three years, Altium Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
As we touched on above, Altium Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. And while EPS growth is in the red, shareholder returns have been great over the last three years, so that's certainly a bright spot! So, while it would be nice to have better EPS growth, our analysis suggests CEO compensation is quite modest.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Altium that investors should think about before committing capital to this stock.
Important note: Altium is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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