Leigh MacKender has been the CEO of Service Stream Limited (ASX:SSM) since 2014. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Leigh MacKender's Compensation Compare With Similar Sized Companies?
According to our data, Service Stream Limited has a market capitalization of AU$994m, and paid its CEO total annual compensation worth AU$2.1m over the year to June 2019. We note that's an increase of 13% above last year. We think total compensation is more important but we note that the CEO salary is lower, at AU$529k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from AU$584m to AU$2.3b, and the median CEO total compensation was AU$1.5m.
As you can see, Leigh MacKender is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Service Stream Limited is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Service Stream, below.
Is Service Stream Limited Growing?
Service Stream Limited has increased its earnings per share (EPS) by an average of 31% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 35%.
This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. You might want to check this free visual report on analyst forecasts for future earnings.
Has Service Stream Limited Been A Good Investment?
Most shareholders would probably be pleased with Service Stream Limited for providing a total return of 186% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared the total CEO remuneration paid by Service Stream Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. Whatever your view on compensation, you might want to check if insiders are buying or selling Service Stream shares (free trial).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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.
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.