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We Think Shareholders Are Less Likely To Approve A Pay Rise For AJ Lucas Group Limited's (ASX:AJL) CEO For Now

Shareholders of AJ Lucas Group Limited (ASX:AJL) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 09 November 2022 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for AJ Lucas Group

Comparing AJ Lucas Group Limited's CEO Compensation With The Industry

At the time of writing, our data shows that AJ Lucas Group Limited has a market capitalization of AU$50m, and reported total annual CEO compensation of AU$647k for the year to June 2022. Notably, that's an increase of 17% over the year before. Notably, the salary which is AU$528.4k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below AU$312m, reported a median total CEO compensation of AU$598k. From this we gather that Brett Tredinnick is paid around the median for CEOs in the industry.

Component

2022

2021

Proportion (2022)

Salary

AU$528k

AU$509k

82%

Other

AU$119k

AU$45k

18%

Total Compensation

AU$647k

AU$555k

100%

Talking in terms of the industry, salary represented approximately 68% of total compensation out of all the companies we analyzed, while other remuneration made up 32% of the pie. AJ Lucas Group is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ceo-compensation

AJ Lucas Group Limited's Growth

AJ Lucas Group Limited's earnings per share (EPS) grew 70% per year over the last three years. In the last year, its revenue is up 11%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 AJ Lucas Group Limited Been A Good Investment?

The return of -59% over three years would not have pleased AJ Lucas Group Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 1 which shouldn't be ignored) in AJ Lucas Group we think you should know about.

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.

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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