Here's What We Learned About The CEO Pay At Argo Investments Limited (ASX:ARG)
Jason Beddow became the CEO of Argo Investments Limited (ASX:ARG) in 2010, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Argo Investments
Comparing Argo Investments Limited's CEO Compensation With the industry
Our data indicates that Argo Investments Limited has a market capitalization of AU$6.0b, and total annual CEO compensation was reported as AU$1.2m for the year to June 2020. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at AU$720.4k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the same industry with market capitalizations ranging between AU$2.6b and AU$8.3b had a median total CEO compensation of AU$1.0m. So it looks like Argo Investments compensates Jason Beddow in line with the median for the industry. Furthermore, Jason Beddow directly owns AU$3.0m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$720k | AU$726k | 62% |
Other | AU$448k | AU$455k | 38% |
Total Compensation | AU$1.2m | AU$1.2m | 100% |
On an industry level, roughly 69% of total compensation represents salary and 31% is other remuneration. Argo Investments pays a modest slice of remuneration through salary, as compared to the broader industry. 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 Argo Investments Limited's Growth Numbers
Over the last three years, Argo Investments Limited has shrunk its earnings per share by 3.3% per year. It saw its revenue drop 31% over the last year.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Argo Investments Limited Been A Good Investment?
Argo Investments Limited has generated a total shareholder return of 13% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
As we noted earlier, Argo Investments pays its CEO in line with similar-sized companies belonging to the same industry. Argo Investments has had a poor showing when it comes to EPS growth, and it's tough to say that shareholder returns have done much to excite us. This doesn't compare well with CEO compensation, which is close to the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Argo Investments that investors should think about before committing capital to this stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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