Yahoo Finance Why DuluxGroup Limited’s (ASX:DLX) CEO Pay Matters To You
Patrick Houlihan became the CEO of DuluxGroup Limited (ASX:DLX) in 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for DuluxGroup
How Does Patrick Houlihan’s Compensation Compare With Similar Sized Companies?
Our data indicates that DuluxGroup Limited is worth AU$2.6b, and total annual CEO compensation is AU$3.4m. (This number is for the twelve months until 2018). Notably, that’s an increase of 12% over the year before. We think total compensation is more important but we note that the CEO salary is lower, at AU$1.2m. We looked at a group of companies with market capitalizations from AU$1.4b to AU$4.4b, and the median CEO compensation was AU$2.5m.
As you can see, Patrick Houlihan is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean DuluxGroup Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at DuluxGroup has changed from year to year.
Is DuluxGroup Limited Growing?
DuluxGroup Limited has increased its earnings per share (EPS) by an average of 8.8% a year, over the last three years In the last year, its revenue is up 3.3%.
I would argue that the improvement in revenue isn’t particularly impressive, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has DuluxGroup Limited Been A Good Investment?
DuluxGroup Limited has generated a total shareholder return of 20% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary…
We compared the total CEO remuneration paid by DuluxGroup Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
One might like to have seen stronger growth, and the shareholder returns have failed to inspire, over the last three years. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. Whatever your view on compensation, you might want to check if insiders are buying or selling DuluxGroup shares (free trial).
Or you might prefer gaze upon this detailed graph of past earnings, revenue and cash flow .
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
