How Much Did Bega Cheese Limited's (ASX:BGA) CEO Pocket Last Year?
In 2017 Paul van Heerwaarden was appointed CEO of Bega Cheese Limited (ASX:BGA). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
View our latest analysis for Bega Cheese
How Does Paul van Heerwaarden's Compensation Compare With Similar Sized Companies?
According to our data, Bega Cheese Limited has a market capitalization of AU$934m, and paid its CEO total annual compensation worth AU$964k over the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$707k. We examined companies with market caps from AU$593m to AU$2.4b, and discovered that the median CEO total compensation of that group was AU$1.4m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.
The graphic below shows how CEO compensation at Bega Cheese has changed from year to year.
Is Bega Cheese Limited Growing?
Bega Cheese Limited has reduced its earnings per share by an average of 31% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 13% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Bega Cheese Limited Been A Good Investment?
Since shareholders would have lost about 10% over three years, some Bega Cheese Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
It appears that Bega Cheese Limited remunerates its CEO below most similar sized companies.
Paul van Heerwaarden is paid less than CEOs of similar size companies, but the company isn't growing and total shareholder returns have been disappointing. Considering all these factors, we'd stop short of saying the CEO pay is too high, but we don't think shareholders would want to see a pay rise before business performance improves. Shareholders may want to check for free if Bega Cheese insiders are buying or selling shares.
Important note: Bega Cheese 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.
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.
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