Is Multistack International Limited's (ASX:MSI) CEO Paid Enough Relative To Peers?
Stephen Leung has been the CEO of Multistack International Limited (ASX:MSI) since 1997. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for Multistack International
How Does Stephen Leung's Compensation Compare With Similar Sized Companies?
Our data indicates that Multistack International Limited is worth AU$562k, and total annual CEO compensation was reported as AU$79k for the year to December 2018. Notably, the salary of AU$79k is the vast majority of the CEO compensation. We took a group of companies with market capitalizations below AU$297m, and calculated the median CEO total compensation to be AU$375k.
Most shareholders would consider it a positive that Stephen Leung takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see a visual representation of the CEO compensation at Multistack International, below.
Is Multistack International Limited Growing?
On average over the last three years, Multistack International Limited has shrunk earnings per share by 13% each year (measured with a line of best fit). In the last year, its revenue is down 52%.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Multistack International Limited Been A Good Investment?
Given the total loss of 17% over three years, many shareholders in Multistack International Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
Multistack International Limited is currently paying its CEO below what is normal for companies of its size.
Shareholders should note that compensation for Stephen Leung is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. Shareholders may want to check for free if Multistack International insiders are buying or selling shares.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.
