Key Things To Understand About Patrys' (ASX:PAB) CEO Pay Cheque
This article will reflect on the compensation paid to James Campbell who has served as CEO of Patrys Limited (ASX:PAB) since 2015. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for Patrys
How Does Total Compensation For James Campbell Compare With Other Companies In The Industry?
At the time of writing, our data shows that Patrys Limited has a market capitalization of AU$29m, and reported total annual CEO compensation of AU$434k for the year to June 2020. Notably, that's a decrease of 14% over the year before. We note that the salary portion, which stands at AU$317.6k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the industry with market capitalizations below AU$280m, reported a median total CEO compensation of AU$441k. From this we gather that James Campbell is paid around the median for CEOs in the industry.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$318k | AU$305k | 73% |
Other | AU$117k | AU$199k | 27% |
Total Compensation | AU$434k | AU$504k | 100% |
Speaking on an industry level, nearly 65% of total compensation represents salary, while the remainder of 35% is other remuneration. According to our research, Patrys has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Patrys Limited's Growth Numbers
Over the last three years, Patrys Limited has shrunk its earnings per share by 8.6% per year. It saw its revenue drop 8.4% over the last year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Patrys Limited Been A Good Investment?
Most shareholders would probably be pleased with Patrys Limited for providing a total return of 45% 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...
As we noted earlier, Patrys pays its CEO in line with similar-sized companies belonging to the same industry. This doesn't look good when you see that EPS growth over the last three years has been negative. On the other hand, shareholder returns are showing positive trends over the same time frame. We do not think CEO compensation is a problem, but shrinking EPS is undoubtedly an issue that will have to be addressed.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for Patrys (1 doesn't sit too well with us!) that you should be aware of before investing here.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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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