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Is AVJennings Limited's (ASX:AVJ) CEO Salary Justified?

Simply Wall St

In 2009 Peter Summers was appointed CEO of AVJennings Limited (ASX:AVJ). 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. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for AVJennings

How Does Peter Summers's Compensation Compare With Similar Sized Companies?

Our data indicates that AVJennings Limited is worth AU$243m, and total annual CEO compensation was reported as AU$1.0m for the year to June 2019. That's actually a decrease on the year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$540k. We examined companies with market caps from AU$147m to AU$587m, and discovered that the median CEO total compensation of that group was AU$686k.

As you can see, Peter Summers is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean AVJennings Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at AVJennings, below.

ASX:AVJ CEO Compensation, November 18th 2019

Is AVJennings Limited Growing?

Over the last three years AVJennings Limited has shrunk its earnings per share by an average of 29% per year (measured with a line of best fit). It saw its revenue drop 20% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has AVJennings Limited Been A Good Investment?

AVJennings Limited has generated a total shareholder return of 15% 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.

In Summary...

We compared total CEO remuneration at AVJennings Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us. And shareholder returns are decent but not great. So we doubt many shareholders would consider the CEO pay to be particularly modest! Whatever your view on compensation, you might want to check if insiders are buying or selling AVJennings shares (free trial).

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.

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.

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. Thank you for reading.