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Trevor Croker has been the CEO of Aristocrat Leisure Limited (ASX:ALL) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Trevor Croker Compare With Other Companies In The Industry?
According to our data, Aristocrat Leisure Limited has a market capitalization of AU$16b, and paid its CEO total annual compensation worth AU$5.6m over the year to September 2019. We note that's an increase of 24% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$1.6m.
For comparison, other companies in the industry with market capitalizations above AU$11b, reported a median total CEO compensation of AU$12m. This suggests that Trevor Croker is paid below the industry median. Moreover, Trevor Croker also holds AU$9.6m worth of Aristocrat Leisure stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 74% of total compensation represents salary and 26% is other remuneration. Aristocrat Leisure pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Aristocrat Leisure Limited's Growth
Over the past three years, Aristocrat Leisure Limited has seen its earnings per share (EPS) grow by 55% per year. Its revenue is up 12% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 Aristocrat Leisure Limited Been A Good Investment?
Aristocrat Leisure Limited has generated a total shareholder return of 31% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As previously discussed, Trevor is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. At the same time, earnings growth has been exceptional over the past three years. However, shareholder returns have failed to show the same level of growth. We would wish for better returns (whether dividends or capital gains) but we do admire the solid EPS growth on show here. As a result of these considerations, CEO compensation seems quite appropriate.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 2 warning signs for Aristocrat Leisure (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.
Important note: Aristocrat Leisure is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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