In 2016 Rebekah O’Flaherty was appointed CEO of 3P Learning Limited (ASX:3PL). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Rebekah O’Flaherty's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that 3P Learning Limited has a market cap of AU$104m, and reported total annual CEO compensation of AU$870k for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$625k. We examined a group of similar sized companies, with market capitalizations of below AU$337m. The median CEO total compensation in that group is AU$394k.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 80% of total compensation represents salary, while the remainder of 20% is other remuneration. 3P Learning does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.
Thus we can conclude that Rebekah O’Flaherty receives more in total compensation than the median of a group of companies in the same market, and of similar size to 3P Learning Limited. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see a visual representation of the CEO compensation at 3P Learning, below.
Is 3P Learning Limited Growing?
3P Learning Limited has seen earnings per share (EPS) move positively by an average of 20% a year, over the last three years (using a line of best fit). Its revenue is up 5.1% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. You might want to check this free visual report on analyst forecasts for future earnings.
Has 3P Learning Limited Been A Good Investment?
With a three year total loss of 21%, 3P Learning Limited would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared the total CEO remuneration paid by 3P Learning 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.
However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Shifting gears from CEO pay for a second, we've picked out 1 warning sign for 3P Learning that investors should be aware of in a dynamic business environment.
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.
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