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Is InvoCare Limited's (ASX:IVC) CEO Pay Justified?

Simply Wall St

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In 2015 Martin Alistair Earp was appointed CEO of InvoCare Limited (ASX:IVC). 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for InvoCare

How Does Martin Alistair Earp's Compensation Compare With Similar Sized Companies?

According to our data, InvoCare Limited has a market capitalization of AU$1.8b, and pays its CEO total annual compensation worth AU$1.1m. (This number is for the twelve months until December 2018). That's less than last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$761k. We looked at a group of companies with market capitalizations from AU$1.4b to AU$4.6b, and the median CEO total compensation was AU$2.4m.

A first glance this seems like a real positive for shareholders, since Martin Alistair Earp is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business.

You can see a visual representation of the CEO compensation at InvoCare, below.

ASX:IVC CEO Compensation, June 24th 2019

Is InvoCare Limited Growing?

On average over the last three years, InvoCare Limited has grown earnings per share (EPS) by 2.8% each year (using a line of best fit). It achieved revenue growth of 3.2% over the last year.

I would argue that the improvement in revenue isn't particularly impressive, but the modest improvement in EPS is good. Considering these factors I'd say performance has been pretty decent, though not amazing. Shareholders might be interested in this free visualization of analyst forecasts.

Has InvoCare Limited Been A Good Investment?

Most shareholders would probably be pleased with InvoCare Limited for providing a total return of 36% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

It looks like InvoCare Limited pays its CEO less than similar sized companies.

Martin Alistair Earp is paid less than what is normal at similar size companies, and the total shareholder return has been pleasing over the last three years. Although we could see higher growth, we'd argue the remuneration is modest, based on these observations. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling InvoCare (free visualization of insider trades).

Important note: InvoCare 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.

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 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. Thank you for reading.