James Kelly became the CEO of Lifestyle Communities Limited (ASX:LIC) in 2007. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. 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.
How Does James Kelly's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Lifestyle Communities Limited has a market cap of AU$688m, and is paying total annual CEO compensation of AU$580k. (This is based on the year to June 2019). We note that's an increase of 9.3% above last year. It is worth noting that the CEO compensation consists almost entirely of the salary, worth AU$575k. When we examined a selection of companies with market caps ranging from AU$295m to AU$1.2b, we found the median CEO total compensation was AU$1.0m.
A first glance this seems like a real positive for shareholders, since James Kelly is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Lifestyle Communities has changed from year to year.
Is Lifestyle Communities Limited Growing?
On average over the last three years, Lifestyle Communities Limited has grown earnings per share (EPS) by 40% each year (using a line of best fit). Its revenue is up 19% over last year.
This demonstrates that the company has been improving recently. A good result. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Lifestyle Communities Limited Been A Good Investment?
Most shareholders would probably be pleased with Lifestyle Communities Limited for providing a total return of 99% over three years. 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.
It looks like Lifestyle Communities Limited pays its CEO less than similar sized companies. Considering the underlying business is growing earnings, this would suggest the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that James Kelly deserves a raise!
It's not often we see shareholders do so well, and yet the CEO is paid modestly. It would be even more positive if company insiders are buying shares. Whatever your view on compensation, you might want to check if insiders are buying or selling Lifestyle Communities shares (free trial).
Important note: Lifestyle Communities 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.
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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.