This article will reflect on the compensation paid to Andrew Bassat who has served as CEO of SEEK Limited (ASX:SEK) since 2011. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing SEEK Limited's CEO Compensation With the industry
Our data indicates that SEEK Limited has a market capitalization of AU$10b, and total annual CEO compensation was reported as AU$4.7m for the year to June 2020. That's a slightly lower by 3.5% over the previous year. Notably, the salary which is AU$2.49m, represents most of the total compensation being paid.
For comparison, other companies in the same industry with market capitalizations ranging between AU$5.3b and AU$16b had a median total CEO compensation of AU$2.8m. Accordingly, our analysis reveals that SEEK Limited pays Andrew Bassat north of the industry median. Moreover, Andrew Bassat also holds AU$428m worth of SEEK stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 73% of total compensation out of all the companies we analyzed, while other remuneration made up 27% of the pie. SEEK sets aside a smaller share of compensation for salary, in comparison to the overall 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 SEEK Limited's Growth Numbers
Over the last three years, SEEK Limited has shrunk its earnings per share by 66% per year. Its revenue is up 2.4% over the last year.
Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has SEEK Limited Been A Good Investment?
Most shareholders would probably be pleased with SEEK Limited for providing a total return of 61% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we touched on above, SEEK Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. We're not seeing great strides in EPS, but the company has clearly pleased some investors, given the returns over the last three years. So while we don't think, Andrew is paid too much, shareholders may want to see some positive EPS growth before pay rises are given out.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for SEEK you should be aware of, and 1 of them shouldn't be ignored.
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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