Is ARB Corporation Limited's (ASX:ARB) CEO Pay Fair?
Andrew Brown became the CEO of ARB Corporation Limited (ASX:ARB) in 2012. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for ARB
How Does Andrew Brown's Compensation Compare With Similar Sized Companies?
Our data indicates that ARB Corporation Limited is worth AU$1.6b, and total annual CEO compensation was reported as AU$408k for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$354k. When we examined a selection of companies with market caps ranging from AU$598m to AU$2.4b, we found the median CEO total compensation was AU$1.4m.
A first glance this seems like a real positive for shareholders, since Andrew Brown is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.
You can see a visual representation of the CEO compensation at ARB, below.
Is ARB Corporation Limited Growing?
On average over the last three years, ARB Corporation Limited has grown earnings per share (EPS) by 6.2% each year (using a line of best fit). Its revenue is up 5.8% over last year.
I'm not particularly impressed by the revenue growth, but the modest improvement in EPS is good. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Shareholders might be interested in this free visualization of analyst forecasts.
Has ARB Corporation Limited Been A Good Investment?
With a total shareholder return of 33% over three years, ARB Corporation Limited shareholders would, in general, be reasonably content. 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.
In Summary...
It looks like ARB Corporation Limited pays its CEO less than similar sized companies.
Andrew Brown is paid less than what is normal at similar size companies, and but overall performance has left me uninspired. However I do not find the CEO compensation to be concerning. So you may want to check if insiders are buying ARB shares with their own money (free access).
Important note: ARB may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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.
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