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Is Collins Foods Limited's (ASX:CKF) CEO Overpaid Relative To Its Peers?

Simply Wall St

Graham Maxwell has been the CEO of Collins Foods Limited (ASX:CKF) since 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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 process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Collins Foods

How Does Graham Maxwell's Compensation Compare With Similar Sized Companies?

According to our data, Collins Foods Limited has a market capitalization of AU$998m, and pays its CEO total annual compensation worth AU$1.5m. (This is based on the year to April 2019). Notably, that's an increase of 37% over the year before. We think total compensation is more important but we note that the CEO salary is lower, at AU$831k. When we examined a selection of companies with market caps ranging from AU$589m to AU$2.4b, we found the median CEO total compensation was AU$1.4m.

So Graham Maxwell 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 Collins Foods has changed from year to year.

ASX:CKF CEO Compensation, August 27th 2019

Is Collins Foods Limited Growing?

Collins Foods Limited has increased its earnings per share (EPS) by an average of 3.2% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 17%.

I would argue that the modest growth in revenue is a notable positive. And the modest growth in earnings per share isn't bad, either. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. You might want to check this free visual report on analyst forecasts for future earnings.

Has Collins Foods Limited Been A Good Investment?

I think that the total shareholder return of 103%, over three years, would leave most Collins Foods Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Remuneration for Graham Maxwell is close enough to the median pay for a CEO of a similar sized company .

While the growth could be better, the shareholder returns are clearly good. So we can conclude that on this analysis the CEO compensation seems pretty sound. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Collins Foods (free visualization of insider trades).

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.