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In 2016 Tim Salt was appointed CEO of GWA Group Limited (ASX:GWA). 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. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Tim Salt's Compensation Compare With Similar Sized Companies?
Our data indicates that GWA Group Limited is worth AU$911m, and total annual CEO compensation is AU$1.9m. (This number is for the twelve months until June 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$1.0m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$571m 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. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at GWA Group has changed over time.
Is GWA Group Limited Growing?
Over the last three years GWA Group Limited has grown its earnings per share (EPS) by an average of 3.6% per year (using a line of best fit). It achieved revenue growth of 19% over the last year.
I think the revenue growth is good. And the improvement in earnings per share is modest but respectable. Although we'll stop short of calling the stock a top performer, we think the company has potential. You might want to check this free visual report on analyst forecasts for future earnings.
Has GWA Group Limited Been A Good Investment?
I think that the total shareholder return of 92%, over three years, would leave most GWA Group 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.
We compared total CEO remuneration at GWA Group Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
While we generally prefer to see stronger EPS growth, there's no arguing with the strong returns to shareholders, over the last three years. So, considering these tasty returns, the CEO compensation may be quite appropriate. Shareholders may want to check for free if GWA Group insiders are buying or selling shares.
If you want to buy a stock that is better than GWA Group, this free list of high return, low debt companies is a great place to look.
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 firstname.lastname@example.org. 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.