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Is Magontec Limited (ASX:MGL) Excessively Paying Its CEO?

Simply Wall St

Nick Andrews is the CEO of Magontec Limited (ASX:MGL). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Magontec

How Does Nick Andrews's Compensation Compare With Similar Sized Companies?

According to our data, Magontec Limited has a market capitalization of AU$26m, and paid its CEO total annual compensation worth AU$471k over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at AU$425k. We examined a group of similar sized companies, with market capitalizations of below AU$296m. The median CEO total compensation in that group is AU$377k.

That means Nick Andrews receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

The graphic below shows how CEO compensation at Magontec has changed from year to year.

ASX:MGL CEO Compensation, October 11th 2019

Is Magontec Limited Growing?

Over the last three years Magontec Limited has shrunk its earnings per share by an average of 3.4% per year (measured with a line of best fit). Its revenue is up 4.9% over last year.

Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Magontec Limited Been A Good Investment?

With a three year total loss of 43%, Magontec Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Nick Andrews is paid around the same as most CEOs of similar size companies.

After looking at EPS and total shareholder returns, it's certainly hard to argue the company has performed well, since both metrics are down. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Magontec.

Important note: Magontec 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.