Yahoo Finance We Think The Compensation For Argo Investments Limited's (ASX:ARG) CEO Looks About Right
Shareholders may be wondering what CEO Jason Beddow plans to do to improve the less than great performance at Argo Investments Limited (ASX:ARG) recently. At the next AGM coming up on 25 October 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.
View our latest analysis for Argo Investments
Comparing Argo Investments Limited's CEO Compensation With the industry
At the time of writing, our data shows that Argo Investments Limited has a market capitalization of AU$6.8b, and reported total annual CEO compensation of AU$1.1m for the year to June 2021. That's a notable decrease of 8.8% on last year. We note that the salary portion, which stands at AU$724.2k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the same industry with market capitalizations ranging between AU$5.4b and AU$16b had a median total CEO compensation of AU$4.7m. That is to say, Jason Beddow is paid under the industry median. Moreover, Jason Beddow also holds AU$3.5m worth of Argo Investments stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2021 | 2020 | Proportion (2021) |
Salary | AU$724k | AU$720k | 68% |
Other | AU$341k | AU$448k | 32% |
Total Compensation | AU$1.1m | AU$1.2m | 100% |
On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. Argo Investments pays out 68% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Argo Investments Limited's Growth Numbers
Over the last three years, Argo Investments Limited has shrunk its earnings per share by 8.6% per year. Its revenue is down 7.8% over the previous year.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Argo Investments Limited Been A Good Investment?
Boasting a total shareholder return of 33% over three years, Argo Investments Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.
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 2 warning signs for Argo Investments (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.
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. 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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