Shareholders of Megaport Limited (ASX:MP1) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also poor, despite revenues growing. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 23 November 2022, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's why we think shareholders should hold off on a raise for the CEO at the moment.
How Does Total Compensation For Vincent English Compare With Other Companies In The Industry?
According to our data, Megaport Limited has a market capitalization of AU$963m, and paid its CEO total annual compensation worth AU$2.6m over the year to June 2022. That's a notable decrease of 27% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$1.0m.
On comparing similar companies from the same industry with market caps ranging from AU$597m to AU$2.4b, we found that the median CEO total compensation was AU$631k. Hence, we can conclude that Vincent English is remunerated higher than the industry median. What's more, Vincent English holds AU$5.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 49% of total compensation represents salary and 51% is other remuneration. Megaport sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Megaport Limited's Growth
Megaport Limited saw earnings per share stay pretty flat over the last three years. Its revenue is up 40% over the last year.
Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Megaport Limited Been A Good Investment?
With a total shareholder return of -35% over three years, Megaport Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
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 1 warning sign for Megaport that you should be aware of before investing.
Important note: Megaport 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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