What Does Supply Network's (ASX:SNL) CEO Pay Reveal?
Geoffrey David Stewart became the CEO of Supply Network Limited (ASX:SNL) in 1999, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Supply Network pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Supply Network
Comparing Supply Network Limited's CEO Compensation With the industry
Our data indicates that Supply Network Limited has a market capitalization of AU$239m, and total annual CEO compensation was reported as AU$725k for the year to June 2020. That's a notable increase of 14% on last year. In particular, the salary of AU$453.5k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar companies from the same industry with market caps ranging from AU$142m to AU$568m, we found that the median CEO total compensation was AU$382k. This suggests that Geoffrey David Stewart is paid more than the median for the industry. Moreover, Geoffrey David Stewart also holds AU$5.8m worth of Supply Network stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$454k | AU$435k | 63% |
Other | AU$272k | AU$203k | 37% |
Total Compensation | AU$725k | AU$638k | 100% |
Speaking on an industry level, nearly 67% of total compensation represents salary, while the remainder of 33% is other remuneration. There isn't a significant difference between Supply Network and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Supply Network Limited's Growth Numbers
Supply Network Limited's earnings per share (EPS) grew 12% per year over the last three years. It achieved revenue growth of 10% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Supply Network Limited Been A Good Investment?
Boasting a total shareholder return of 84% over three years, Supply Network Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
As we touched on above, Supply Network Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Importantly though, EPS growth and shareholder returns are very impressive over the last three years. Considering such exceptional results for the company, we'd venture to say CEO compensation is fair. The pleasing shareholder returns are the cherry on top. We wouldn't be wrong in saying that shareholders feel that Geoffrey David's performance creates value for the company.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Supply Network that you should be aware of before investing.
Switching gears from Supply Network, 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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