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Storm McGrath has been the CEO of Kip McGrath Education Centres Limited (ASX:KME) since 2007, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Kip McGrath Education Centres pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Kip McGrath Education Centres Limited's CEO Compensation With the industry
At the time of writing, our data shows that Kip McGrath Education Centres Limited has a market capitalization of AU$53m, and reported total annual CEO compensation of AU$455k for the year to June 2020. This means that the compensation hasn't changed much from last year. Notably, the salary which is AU$383.1k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under AU$271m, the reported median total CEO compensation was AU$524k. From this we gather that Storm McGrath is paid around the median for CEOs in the industry. What's more, Storm McGrath holds AU$3.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 81% of total compensation represents salary, while the remainder of 19% is other remuneration. Our data reveals that Kip McGrath Education Centres allocates salary more or less in line with the wider market. 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.
A Look at Kip McGrath Education Centres Limited's Growth Numbers
Over the past three years, Kip McGrath Education Centres Limited has seen its earnings per share (EPS) grow by 2.6% per year. It achieved revenue growth of 5.2% over the last year.
We're not particularly impressed by the revenue growth, but the modest improvement in EPS is good. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Kip McGrath Education Centres Limited Been A Good Investment?
Most shareholders would probably be pleased with Kip McGrath Education Centres Limited for providing a total return of 213% over three years. 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 we noted earlier, Kip McGrath Education Centres pays its CEO in line with similar-sized companies belonging to the same industry. But the business isn't reporting great numbers in terms of EPS growth. On the other hand, shareholder returns over the same period have been very healthy. There is room for improved company performance, but we don't see the CEO compensation as a big issue here.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 5 warning signs (and 1 which is a bit unpleasant) in Kip McGrath Education Centres we think you should know about.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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