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Is Matrix Composites & Engineering Ltd's (ASX:MCE) CEO Pay Justified?

Simply Wall St

In 2009 Aaron Begley was appointed CEO of Matrix Composites & Engineering Ltd (ASX:MCE). 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Matrix Composites & Engineering

How Does Aaron Begley's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Matrix Composites & Engineering Ltd has a market cap of AU$37m, and is paying total annual CEO compensation of AU$663k. (This is based on the year to June 2019). That's a modest increase of 4.4% on the prior year year. We think total compensation is more important but we note that the CEO salary is lower, at AU$466k. 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$360k.

It would therefore appear that Matrix Composites & Engineering Ltd pays Aaron Begley more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Matrix Composites & Engineering has changed over time.

ASX:MCE CEO Compensation, September 5th 2019
ASX:MCE CEO Compensation, September 5th 2019

Is Matrix Composites & Engineering Ltd Growing?

Over the last three years Matrix Composites & Engineering Ltd has shrunk its earnings per share by an average of 4.0% per year (measured with a line of best fit). It achieved revenue growth of 95% over the last year.

As investors, we are a bit wary of companies that have lower earnings per share, over three years. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. It could be important to check this free visual depiction of what analysts expect for the future.

Has Matrix Composites & Engineering Ltd Been A Good Investment?

With a three year total loss of 20%, Matrix Composites & Engineering Ltd would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared the total CEO remuneration paid by Matrix Composites & Engineering Ltd, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. So you may want to check if insiders are buying Matrix Composites & Engineering shares with their own money (free access).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.