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How Much Does Incitec Pivot's (ASX:IPL) CEO Make?

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·4 min read
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Jeanne Johns became the CEO of Incitec Pivot Limited (ASX:IPL) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Incitec Pivot pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Incitec Pivot

How Does Total Compensation For Jeanne Johns Compare With Other Companies In The Industry?

According to our data, Incitec Pivot Limited has a market capitalization of AU$3.7b, and paid its CEO total annual compensation worth AU$3.2m over the year to September 2019. Notably, that's a decrease of 17% over the year before. We note that the salary portion, which stands at AU$1.63m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from AU$2.8b to AU$8.9b, the reported median CEO total compensation was AU$3.2m. This suggests that Incitec Pivot remunerates its CEO largely in line with the industry average. Moreover, Jeanne Johns also holds AU$1.1m worth of Incitec Pivot stock directly under their own name.

Component

2019

2018

Proportion (2019)

Salary

AU$1.6m

AU$1.4m

51%

Other

AU$1.6m

AU$2.5m

49%

Total Compensation

AU$3.2m

AU$3.9m

100%

Talking in terms of the industry, salary represented approximately 69% of total compensation out of all the companies we analyzed, while other remuneration made up 31% of the pie. Incitec Pivot sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
ceo-compensation

Incitec Pivot Limited's Growth

Incitec Pivot Limited has reduced its earnings per share by 9.6% a year over the last three years. It achieved revenue growth of 2.7% over the last year.

The decline in earnings is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Incitec Pivot Limited Been A Good Investment?

With a three year total loss of 39% for the shareholders, Incitec Pivot Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As previously discussed, Jeanne is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, earnings growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for Incitec Pivot (of which 1 is potentially serious!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.