Peter Jinks has been the CEO of Enevis Limited (ASX:ENE) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Peter Jinks's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Enevis Limited has a market cap of AU$9.3m, and reported total annual CEO compensation of AU$248k for the year to June 2019. That's just a smallish increase of 1.4% on last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$227k. We took a group of companies with market capitalizations below AU$290m, and calculated the median CEO total compensation to be AU$378k.
A first glance this seems like a real positive for shareholders, since Peter Jinks is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business.
You can see a visual representation of the CEO compensation at Enevis, below.
Is Enevis Limited Growing?
Enevis Limited has increased its earnings per share (EPS) by an average of 34% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 52%.
This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Enevis Limited Been A Good Investment?
Since shareholders would have lost about 65% over three years, some Enevis Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
It looks like Enevis Limited pays its CEO less than similar sized companies.
Considering the underlying business is growing earnings, this would suggest the pay is modest. Unfortunately, some shareholders may be disappointed with their returns, given the company's performance over the last three years. So while we would not say that Peter Jinks is generously paid, it would be good to see an improvement in business performance before too an increase in pay. In this case we may want to look deeper into the company. There are some real positives and we could see improved returns in the longer term. So you may want to check if insiders are buying Enevis shares with their own money (free access).
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.
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