Yahoo Finance Increases to CEO Compensation Might Be Put On Hold For Now at Emeco Holdings Limited (ASX:EHL)
Shareholders of Emeco Holdings Limited (ASX:EHL) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 18 November 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
See our latest analysis for Emeco Holdings
How Does Total Compensation For Ian Testrow Compare With Other Companies In The Industry?
According to our data, Emeco Holdings Limited has a market capitalization of AU$563m, and paid its CEO total annual compensation worth AU$5.3m over the year to June 2021. We note that's a decrease of 46% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$1.0m.
On examining similar-sized companies in the industry with market capitalizations between AU$272m and AU$1.1b, we discovered that the median CEO total compensation of that group was AU$966k. Hence, we can conclude that Ian Testrow is remunerated higher than the industry median. What's more, Ian Testrow holds AU$13m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2021 | 2020 | Proportion (2021) |
Salary | AU$1.0m | AU$1.1m | 19% |
Other | AU$4.3m | AU$8.9m | 81% |
Total Compensation | AU$5.3m | AU$10.0m | 100% |
On an industry level, roughly 53% of total compensation represents salary and 47% is other remuneration. Emeco Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Emeco Holdings Limited's Growth
Over the past three years, Emeco Holdings Limited has seen its earnings per share (EPS) grow by 24% per year. In the last year, its revenue is up 15%.
This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Emeco Holdings Limited Been A Good Investment?
Few Emeco Holdings Limited shareholders would feel satisfied with the return of -62% over three years. So shareholders would probably want the company to be less generous with CEO compensation.
To Conclude...
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for Emeco Holdings (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from Emeco Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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