This article will reflect on the compensation paid to Ross Shrimpton who has served as CEO of Ashley Services Group Limited (ASX:ASH) since 2017. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Ashley Services Group.
Comparing Ashley Services Group Limited's CEO Compensation With the industry
According to our data, Ashley Services Group Limited has a market capitalization of AU$46m, and paid its CEO total annual compensation worth AU$450k over the year to July 2020. That's just a smallish increase of 5.9% on last year. We note that the salary portion, which stands at AU$429.0k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$281m, the reported median total CEO compensation was AU$442k. From this we gather that Ross Shrimpton is paid around the median for CEOs in the industry. What's more, Ross Shrimpton holds AU$27m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 73% of total compensation represents salary, while the remainder of 27% is other remuneration. Investors will find it interesting that Ashley Services Group pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Ashley Services Group Limited's Growth
Ashley Services Group Limited has seen its earnings per share (EPS) increase by 57% a year over the past three years. It achieved revenue growth of 17% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Ashley Services Group Limited Been A Good Investment?
Most shareholders would probably be pleased with Ashley Services Group Limited for providing a total return of 231% 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.
Ross receives almost all of their compensation through a salary. As we touched on above, Ashley Services Group Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Investors would surely be happy to see that returns have been great, and that EPS is up. Indeed, many might consider that Ross is compensated rather modestly, given the solid company performance! Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Ashley Services Group that investors should be aware of in a dynamic business environment.
Important note: Ashley Services Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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