Should You Be Pleased About The CEO Pay At McPherson's Limited's (ASX:MCP)
Laurie McAllister has been the CEO of McPherson's Limited (ASX:MCP) since 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for McPherson's
How Does Laurie McAllister's Compensation Compare With Similar Sized Companies?
According to our data, McPherson's Limited has a market capitalization of AU$284m, and paid its CEO total annual compensation worth AU$1.1m over the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$728k. When we examined a selection of companies with market caps ranging from AU$157m to AU$629m, we found the median CEO total compensation was AU$852k.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 82% of total compensation out of all the companies we analysed, while other remuneration made up 18% of the pie. McPherson's does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.
So Laurie McAllister is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance. The graphic below shows how CEO compensation at McPherson's has changed from year to year.
Is McPherson's Limited Growing?
McPherson's Limited has seen earnings per share (EPS) move positively by an average of 65% a year, over the last three years (using a line of best fit). Revenue was pretty flat on last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. You might want to check this free visual report on analyst forecasts for future earnings.
Has McPherson's Limited Been A Good Investment?
I think that the total shareholder return of 134%, over three years, would leave most McPherson's Limited shareholders smiling. 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.
In Summary...
Laurie McAllister is paid around the same as most CEOs of similar size companies.
Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. So one could argue the CEO compensation is quite modest, if you consider company performance! On another note, we've spotted 2 warning signs for McPherson's that investors should look into moving forward.
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.
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.
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