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Rob Graham has been the CEO of Schrole Group Ltd (ASX:SCL) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Schrole Group Ltd's CEO Compensation With the industry
Our data indicates that Schrole Group Ltd has a market capitalization of AU$27m, and total annual CEO compensation was reported as AU$299k for the year to December 2019. That's mostly flat as compared to the prior year's compensation. In particular, the salary of AU$267.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below AU$277m, reported a median total CEO compensation of AU$328k. So it looks like Schrole Group compensates Rob Graham in line with the median for the industry. Moreover, Rob Graham also holds AU$3.9m worth of Schrole Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 59% of total compensation represents salary and 41% is other remuneration. According to our research, Schrole Group has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Schrole Group Ltd's Growth
Schrole Group Ltd has seen its earnings per share (EPS) increase by 100% a year over the past three years. It achieved revenue growth of 32% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Schrole Group Ltd Been A Good Investment?
Since shareholders would have lost about 36% over three years, some Schrole Group Ltd investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
As previously discussed, Rob is compensated close to the median for companies of its size, and which belong to the same industry. At the same time, the company has logged negative shareholder returns over the last three years. But on the bright side, EPS growth is positive over the same period. It's tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 5 warning signs for Schrole Group you should be aware of, and 2 of them are significant.
Important note: Schrole Group 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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