This article will reflect on the compensation paid to Tom Cregan who has served as CEO of EML Payments Limited (ASX:EML) since 2012. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Tom Cregan Compare With Other Companies In The Industry?
Our data indicates that EML Payments Limited has a market capitalization of AU$1.2b, and total annual CEO compensation was reported as AU$1.6m for the year to June 2020. Notably, that's a decrease of 40% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$629k.
On examining similar-sized companies in the industry with market capitalizations between AU$570m and AU$2.3b, we discovered that the median CEO total compensation of that group was AU$1.6m. So it looks like EML Payments compensates Tom Cregan in line with the median for the industry. Furthermore, Tom Cregan directly owns AU$34m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 71% of total compensation represents salary, while the remainder of 29% is other remuneration. EML Payments pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
EML Payments Limited's Growth
EML Payments Limited's earnings per share (EPS) grew 31% per year over the last three years. In the last year, its revenue is up 24%.
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. 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 EML Payments Limited Been A Good Investment?
Boasting a total shareholder return of 45% over three years, EML Payments Limited has done well by shareholders. 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.
As previously discussed, Tom is compensated close to the median for companies of its size, and which belong to the same industry. The company is growing EPS and total shareholder returns have been pleasing. Indeed, many might consider that Tom is compensated rather modestly, given the solid company performance! Stockholders might even be okay with a bump in pay, seeing as how investor returns have been so strong.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for EML Payments that investors should think about before committing capital to this stock.
Switching gears from EML Payments, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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