How Is Orbital's (ASX:OEC) CEO Compensated?
Todd Alder has been the CEO of Orbital Corporation Limited (ASX:OEC) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Orbital.
View our latest analysis for Orbital
Comparing Orbital Corporation Limited's CEO Compensation With the industry
Our data indicates that Orbital Corporation Limited has a market capitalization of AU$96m, and total annual CEO compensation was reported as AU$622k for the year to June 2020. That's a notable increase of 29% on last year. We note that the salary portion, which stands at AU$319.0k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$258m, the reported median total CEO compensation was AU$655k. From this we gather that Todd Alder is paid around the median for CEOs in the industry. Moreover, Todd Alder also holds AU$432k worth of Orbital stock directly under their own name.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$319k | AU$319k | 51% |
Other | AU$303k | AU$164k | 49% |
Total Compensation | AU$622k | AU$483k | 100% |
Talking in terms of the industry, salary represented approximately 52% of total compensation out of all the companies we analyzed, while other remuneration made up 48% of the pie. Our data reveals that Orbital allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Orbital Corporation Limited's Growth Numbers
Orbital Corporation Limited's earnings per share (EPS) grew 22% per year over the last three years. Its revenue is up 123% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Orbital Corporation Limited Been A Good Investment?
Most shareholders would probably be pleased with Orbital Corporation Limited for providing a total return of 200% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
As previously discussed, Todd is compensated close to the median for companies of its size, and which belong to the same industry. Investors would surely be happy to see that returns have been great, and that EPS is up. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. Stockholders might even be okay with a bump in pay, seeing as how investor returns have been so strong.
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. We've identified 3 warning signs for Orbital that investors should be aware of in a dynamic business environment.
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.
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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