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Does Link Administration Holdings Limited's (ASX:LNK) CEO Pay Compare Well With Peers?

Simply Wall St

In 2002 John McMurtrie was appointed CEO of Link Administration Holdings Limited (ASX:LNK). First, this article will compare CEO compensation with compensation at similar sized companies. 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.

View our latest analysis for Link Administration Holdings

How Does John McMurtrie's Compensation Compare With Similar Sized Companies?

Our data indicates that Link Administration Holdings Limited is worth AU$3.1b, and total annual CEO compensation was reported as AU$1.3m for the year to June 2019. That's less than last year. We think total compensation is more important but we note that the CEO salary is lower, at AU$1.0m. We examined companies with market caps from AU$1.5b to AU$4.7b, and discovered that the median CEO total compensation of that group was AU$2.1m.

Most shareholders would consider it a positive that John McMurtrie takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.

The graphic below shows how CEO compensation at Link Administration Holdings has changed from year to year.

ASX:LNK CEO Compensation, October 26th 2019

Is Link Administration Holdings Limited Growing?

Link Administration Holdings Limited has increased its earnings per share (EPS) by an average of 45% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 17%.

This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.

Has Link Administration Holdings Limited Been A Good Investment?

Given the total loss of 11% over three years, many shareholders in Link Administration Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

It looks like Link Administration Holdings Limited pays its CEO less than similar sized companies.

Considering the underlying business is growing earnings, this would suggest the pay is modest. Few would deny that the total shareholder return over the last three years could have been a lot better. We're not critical of the remuneration John McMurtrie receives, but it would be good to see improved returns to shareholders before the remuneration grows too much. When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. Shareholders may want to check for free if Link Administration Holdings insiders are buying or selling shares.

If you want to buy a stock that is better than Link Administration Holdings, this free list of high return, low debt companies is a great place to look.

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.