This article will reflect on the compensation paid to Mike Schlumpberger who has served as CEO of American Pacific Borates Limited (ASX:ABR) since 2017. This analysis will also assess whether American Pacific Borates pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing American Pacific Borates Limited's CEO Compensation With the industry
Our data indicates that American Pacific Borates Limited has a market capitalization of AU$262m, and total annual CEO compensation was reported as AU$951k for the year to June 2020. That's a notable increase of 18% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$366k.
For comparison, other companies in the same industry with market capitalizations ranging between AU$135m and AU$541m had a median total CEO compensation of AU$614k. This suggests that Mike Schlumpberger is paid more than the median for the industry. What's more, Mike Schlumpberger holds AU$574k worth of shares in the company in their own name.
On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. In American Pacific Borates' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
American Pacific Borates Limited's Growth
American Pacific Borates Limited's earnings per share (EPS) grew 27% per year over the last three years. Its revenue is up 75% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has American Pacific Borates Limited Been A Good Investment?
Most shareholders would probably be pleased with American Pacific Borates Limited for providing a total return of 118% over three years. 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.
As previously discussed, Mike is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, American Pacific Borates has produced strong EPS growth and shareholder returns over the last three years. So, in acknowledgment of the overall excellent performance, we believe CEO compensation is appropriate. And given most shareholders are probably very happy with recent returns, they might even think that Mike deserves a raise!
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for American Pacific Borates that investors should be aware of in a dynamic business environment.
Important note: American Pacific Borates 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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