Yahoo Finance How Should Investors React To Elders Limited's (ASX:ELD) CEO Pay?
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Mark Allison became the CEO of Elders Limited (ASX:ELD) in 2014. 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Elders
How Does Mark Allison's Compensation Compare With Similar Sized Companies?
Our data indicates that Elders Limited is worth AU$636m, and total annual CEO compensation is AU$2.8m. (This number is for the twelve months until September 2018). We think total compensation is more important but we note that the CEO salary is lower, at AU$859k. We examined companies with market caps from AU$287m to AU$1.1b, and discovered that the median CEO total compensation of that group was AU$1.0m.
Thus we can conclude that Mark Allison receives more in total compensation than the median of a group of companies in the same market, and of similar size to Elders 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.
The graphic below shows how CEO compensation at Elders has changed from year to year.
Is Elders Limited Growing?
On average over the last three years, Elders Limited has grown earnings per share (EPS) by 2.8% each year (using a line of best fit). In the last year, its revenue changed by just 0.2%.
I'm not particularly impressed by the revenue growth, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. You might want to check this free visual report on analyst forecasts for future earnings.
Has Elders Limited Been A Good Investment?
Boasting a total shareholder return of 57% over three years, Elders 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...
We compared the total CEO remuneration paid by Elders Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Over the last three years returns to investors have been great, though we might have liked stronger business growth. As a result of the juicy return to investors, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Elders shares (free trial).
Important note: Elders 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.
