U.S. Markets closed

Is The Agency Group Australia Limited's (ASX:AU1) CEO Overpaid Relative To Its Peers?

Simply Wall St

In 2016 Paul Niardone was appointed CEO of The Agency Group Australia Limited (ASX:AU1). 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Agency Group Australia

How Does Paul Niardone's Compensation Compare With Similar Sized Companies?

Our data indicates that The Agency Group Australia Limited is worth AU$18m, and total annual CEO compensation was reported as AU$466k for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$300k. We looked at a group of companies with market capitalizations under AU$292m, and the median CEO total compensation was AU$381k.

So Paul Niardone receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

The graphic below shows how CEO compensation at Agency Group Australia has changed from year to year.

ASX:AU1 CEO Compensation, January 9th 2020

Is The Agency Group Australia Limited Growing?

Over the last three years The Agency Group Australia Limited has grown its earnings per share (EPS) by an average of 26% per year (using a line of best fit). It achieved revenue growth of 86% over the last year.

This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has The Agency Group Australia Limited Been A Good Investment?

Given the total loss of 90% over three years, many shareholders in The Agency Group Australia Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Paul Niardone is paid around what is normal the leaders of comparable size companies.

We think that the EPS growth is very pleasing, but we cannot say the same about the lacklustre shareholder returns (over the last three years). We'd be surprised if shareholders want to see a pay rise for the CEO, but we'd stop short of calling their pay too generous. So you may want to check if insiders are buying Agency Group Australia shares with their own money (free access).

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.