Yahoo Finance Our View On Elders' (ASX:ELD) CEO Pay
Mark Allison has been the CEO of Elders Limited (ASX:ELD) since 2014, 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 Elders.
See our latest analysis for Elders
How Does Total Compensation For Mark Allison Compare With Other Companies In The Industry?
At the time of writing, our data shows that Elders Limited has a market capitalization of AU$1.5b, and reported total annual CEO compensation of AU$2.5m for the year to September 2020. That's a notable increase of 51% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$924k.
On examining similar-sized companies in the industry with market capitalizations between AU$525m and AU$2.1b, we discovered that the median CEO total compensation of that group was AU$1.2m. Accordingly, our analysis reveals that Elders Limited pays Mark Allison north of the industry median. Furthermore, Mark Allison directly owns AU$12m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$924k | AU$896k | 37% |
Other | AU$1.6m | AU$771k | 63% |
Total Compensation | AU$2.5m | AU$1.7m | 100% |
On an industry level, around 80% of total compensation represents salary and 20% is other remuneration. Elders sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Elders Limited's Growth
Over the last three years, Elders Limited has shrunk its earnings per share by 6.8% per year. In the last year, its revenue is up 29%.
The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Elders Limited Been A Good Investment?
Most shareholders would probably be pleased with Elders Limited for providing a total return of 43% over three years. 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...
As we touched on above, Elders Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Still, shareholder returns over the last three years,and recent revenue growth have been trending northwards. The only sore spot is EPS growth, which is negative over the same period. All things considered, although EPS growth would've been nice, the positive investor returns and revenue growth lead us to believe Mark is appropriately paid.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Elders that investors should think about before committing capital to this 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. 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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