Ian Testrow became the CEO of Emeco Holdings Limited (ASX:EHL) in 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. 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.
How Does Ian Testrow's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Emeco Holdings Limited has a market cap of AU$643m, and is paying total annual CEO compensation of AU$11m. (This number is for the twelve months until June 2019). We note that's an increase of 134% above last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$1.1m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$292m to AU$1.2b. The median total CEO compensation was AU$1.0m.
Thus we can conclude that Ian Testrow receives more in total compensation than the median of a group of companies in the same market, and of similar size to Emeco Holdings Limited. However, this doesn't necessarily mean the pay is too high. 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, below, how CEO compensation at Emeco Holdings has changed over time.
Is Emeco Holdings Limited Growing?
On average over the last three years, Emeco Holdings Limited has grown earnings per share (EPS) by 108% each year (using a line of best fit). Its revenue is up 22% over last year.
This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Emeco Holdings Limited Been A Good Investment?
Most shareholders would probably be pleased with Emeco Holdings Limited for providing a total return of 351% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We examined the amount Emeco Holdings Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if Emeco Holdings insiders are buying or selling shares.
Important note: Emeco Holdings 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.
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.
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. Thank you for reading.