This article will reflect on the compensation paid to Andrew Elf who has served as CEO of Mitchell Services Limited (ASX:MSV) since 2014. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Mitchell Services.
Comparing Mitchell Services Limited's CEO Compensation With the industry
At the time of writing, our data shows that Mitchell Services Limited has a market capitalization of AU$102m, and reported total annual CEO compensation of AU$706k for the year to June 2020. That's a fairly small increase of 5.1% over the previous year. In particular, the salary of AU$400.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below AU$282m, reported a median total CEO compensation of AU$308k. This suggests that Andrew Elf is paid more than the median for the industry. Furthermore, Andrew Elf directly owns AU$401k worth of shares in the company.
On an industry level, around 68% of total compensation represents salary and 32% is other remuneration. It's interesting to note that Mitchell Services allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Mitchell Services Limited's Growth Numbers
Mitchell Services Limited's earnings per share (EPS) grew 81% per year over the last three years. In the last year, its revenue is up 46%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Mitchell Services Limited Been A Good Investment?
With a total shareholder return of 32% over three years, Mitchell Services Limited shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As we touched on above, Mitchell Services 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. But the company has impressed us with its EPS growth, over three years. We also think investor returns are steady over the same time period. While it may be worth researching further, we don't see a problem with the high CEO pay, given the good EPS growth.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 5 warning signs for Mitchell Services that investors should be aware of in a dynamic business environment.
Important note: Mitchell Services 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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