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Is GWA Group Limited (ASX:GWA) Overpaying Its CEO?

Simply Wall St

Tim Salt became the CEO of GWA Group Limited (ASX:GWA) in 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for GWA Group

How Does Tim Salt's Compensation Compare With Similar Sized Companies?

Our data indicates that GWA Group Limited is worth AU$876m, and total annual CEO compensation was reported as AU$1.8m for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$967k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$570m to AU$2.3b. The median total CEO compensation was AU$1.4m.

It would therefore appear that GWA Group Limited pays Tim Salt more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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.

The graphic below shows how CEO compensation at GWA Group has changed from year to year.

ASX:GWA CEO Compensation, January 2nd 2020

Is GWA Group Limited Growing?

GWA Group Limited has reduced its earnings per share by an average of 3.3% a year, over the last three years (measured with a line of best fit). Its revenue is up 6.4% over 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 GWA Group Limited Been A Good Investment?

Boasting a total shareholder return of 36% over three years, GWA Group Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

We compared the total CEO remuneration paid by GWA Group Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

We think many shareholders would be underwhelmed with the business growth over the last three years. But clearly there are some positives, because investors have done well over the same time frame. Considering this, shareholders are probably not too worried about the CEO compensation. So you may want to check if insiders are buying GWA Group shares with their own money (free access).

Important note: GWA Group 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.