This article will reflect on the compensation paid to Raj Naran who has served as CEO of ALS Limited (ASX:ALQ) since 2017. This analysis will also assess whether ALS pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Raj Naran Compare With Other Companies In The Industry?
At the time of writing, our data shows that ALS Limited has a market capitalization of AU$4.4b, and reported total annual CEO compensation of AU$3.0m for the year to March 2020. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at AU$1.67m constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the same industry with market capitalizations ranging between AU$2.8b and AU$8.9b had a median total CEO compensation of AU$7.9m. Accordingly, ALS pays its CEO under the industry median. What's more, Raj Naran holds AU$2.2m worth of shares in the company in their own name.
On an industry level, roughly 80% of total compensation represents salary and 20% is other remuneration. ALS pays a modest slice of remuneration through salary, as compared to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
ALS Limited's Growth
Over the last three years, ALS Limited has shrunk its earnings per share by 8.0% per year. In the last year, its revenue is up 10%.
Overall this is not a very positive result for shareholders. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has ALS Limited Been A Good Investment?
ALS Limited has served shareholders reasonably well, with a total return of 25% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As we touched on above, ALS Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Shareholder returns have been uninspiring, but EPS growth has arguably been worse, over the last three years. It's tough for us to say that Raj is earning a high compensation, but any bump in pay is unlikely at this stage since shareholders will likely hold off support until performance improves.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 4 warning signs for ALS that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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