In 2014 Peter Allen was appointed CEO of Scentre Group (ASX:SCG). This analysis aims first to contrast CEO compensation with other large companies. Next, we'll consider growth that the business demonstrates. 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.
How Does Peter Allen's Compensation Compare With Similar Sized Companies?
Our data indicates that Scentre Group is worth AU$21b, and total annual CEO compensation is AU$7.7m. (This number is for the twelve months until December 2018). We think total compensation is more important but we note that the CEO salary is lower, at AU$2.0m. We took a group of companies with market capitalizations over AU$12b, and calculated the median CEO total compensation to be AU$5.4m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Thus we can conclude that Peter Allen receives more in total compensation than the median of a group of large companies in the same market as Scentre Group. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Scentre Group, below.
Is Scentre Group Growing?
Over the last three years Scentre Group has shrunk its earnings per share by an average of 8.3% per year (measured with a line of best fit). In the last year, its revenue is up 4.2%.
Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Scentre Group Been A Good Investment?
Scentre Group has not done too badly by shareholders, with a total return of 1.8%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
We compared total CEO remuneration at Scentre Group with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
And while shareholder returns have been respectable, they have hardly been superb. So we think more research is needed, but we don't think the CEO underpaid. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Scentre Group (free visualization of insider trades).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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 email@example.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.