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Is EQT Holdings Limited's (ASX:EQT) CEO Overpaid Relative To Its Peers?

Simply Wall St
·4 mins read

Mick O’Brien became the CEO of EQT Holdings Limited (ASX:EQT) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for EQT Holdings

How Does Mick O’Brien's Compensation Compare With Similar Sized Companies?

Our data indicates that EQT Holdings Limited is worth AU$461m, and total annual CEO compensation was reported as AU$1.5m for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$714k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$156m to AU$624m. The median total CEO compensation was AU$850k.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where EQT Holdings stands. Talking in terms of the sector, salary represented approximately 62% of total compensation out of all the companies we analysed, while other remuneration made up 38% of the pie. So it seems like there isn't a significant difference between EQT Holdings and the broader market, in terms of salary allocation in the overall compensation package.

As you can see, Mick O’Brien is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean EQT Holdings 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 EQT Holdings, below.

ASX:EQT CEO Compensation May 19th 2020
ASX:EQT CEO Compensation May 19th 2020

Is EQT Holdings Limited Growing?

On average over the last three years, EQT Holdings Limited has seen earnings per share (EPS) move in a favourable direction by 16% each year (using a line of best fit). Its revenue is up 3.8% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.

Has EQT Holdings Limited Been A Good Investment?

I think that the total shareholder return of 43%, over three years, would leave most EQT Holdings Limited shareholders smiling. 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.

In Summary...

We compared total CEO remuneration at EQT Holdings Limited with the amount paid at companies with a similar market capitalization. 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. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. On another note, EQT Holdings has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about.

Important note: EQT 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.

Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email 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. 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. Thank you for reading.