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Andrew Brown has been the CEO of ARB Corporation Limited (ASX:ARB) since 2012, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for ARB.
How Does Total Compensation For Andrew Brown Compare With Other Companies In The Industry?
At the time of writing, our data shows that ARB Corporation Limited has a market capitalization of AU$2.2b, and reported total annual CEO compensation of AU$395k for the year to June 2020. We note that's a decrease of 11% compared to last year. In particular, the salary of AU$310.9k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations ranging from AU$1.4b to AU$4.4b, the reported median CEO total compensation was AU$2.3m. That is to say, Andrew Brown is paid under the industry median. Furthermore, Andrew Brown directly owns AU$488k worth of shares in the company.
Talking in terms of the industry, salary represented approximately 79% of total compensation out of all the companies we analyzed, while other remuneration made up 21% of the pie. Our data reveals that ARB allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
ARB Corporation Limited's Growth
ARB Corporation Limited's earnings per share (EPS) grew 5.0% per year over the last three years. It achieved revenue growth of 4.7% over the last year.
We'd prefer higher revenue growth, but the modest improvement in EPS is good. Considering these factors we'd say performance has been pretty decent, though not amazing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has ARB Corporation Limited Been A Good Investment?
Most shareholders would probably be pleased with ARB Corporation Limited for providing a total return of 67% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we noted earlier, ARB pays its CEO lower than the norm for similar-sized companies belonging to the same industry. On the other hand, shareholder returns have been have been very pleasing, over the last three years, and that should put a smile on the faces of investors. So, considering these tasty returns, CEO compensation seems quite appropriate.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for ARB that you should be aware of before investing.
Switching gears from ARB, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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