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Does G8 Education Limited's (ASX:GEM) CEO Pay Compare Well With Peers?

Simply Wall St

Gary Carroll became the CEO of G8 Education Limited (ASX:GEM) in 2017. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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.

Check out our latest analysis for G8 Education

How Does Gary Carroll's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that G8 Education Limited has a market cap of AU$900m, and reported total annual CEO compensation of AU$798k for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at AU$740k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$575m to AU$2.3b. The median total CEO compensation was AU$1.4m.

A first glance this seems like a real positive for shareholders, since Gary Carroll is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business.

You can see a visual representation of the CEO compensation at G8 Education, below.

ASX:GEM CEO Compensation, January 5th 2020

Is G8 Education Limited Growing?

G8 Education Limited has reduced its earnings per share by an average of 16% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 8.3% over the last year.

Unfortunately, earnings per share have trended lower over the last 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. Shareholders might be interested in this free visualization of analyst forecasts.

Has G8 Education Limited Been A Good Investment?

With a three year total loss of 38%, G8 Education Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

G8 Education Limited is currently paying its CEO below what is normal for companies of its size.

The compensation paid to Gary Carroll is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). Considering all these factors, we'd stop short of saying the CEO pay is too high, but we don't think shareholders would want to see a pay rise before business performance improves. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling G8 Education (free visualization of insider trades).

Important note: G8 Education may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.

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. Thank you for reading.