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Is Premier Investments Limited's (ASX:PMV) CEO Being Overpaid?

Simply Wall St

Mark McInnes has been the CEO of Premier Investments Limited (ASX:PMV) since 2011. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Premier Investments

How Does Mark McInnes's Compensation Compare With Similar Sized Companies?

According to our data, Premier Investments Limited has a market capitalization of AU$2.5b, and pays its CEO total annual compensation worth AU$6.8m. (This number is for the twelve months until July 2018). We think total compensation is more important but we note that the CEO salary is lower, at AU$2.5m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$1.5b to AU$4.7b. The median total CEO compensation was AU$2.4m.

It would therefore appear that Premier Investments Limited pays Mark McInnes more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Premier Investments has changed over time.

ASX:PMV CEO Compensation, August 2nd 2019

Is Premier Investments Limited Growing?

Premier Investments Limited has reduced its earnings per share by an average of 4.9% a year, over the last three years (measured with a line of best fit). Its revenue is up 8.4% over last year.

Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.

Has Premier Investments Limited Been A Good Investment?

Premier Investments Limited has served shareholders reasonably well, with a total return of 10% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

We compared the total CEO remuneration paid by Premier Investments Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

And shareholder returns are decent but not great. So you may want to delve deeper, because we don't think the CEO pay is too low. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Premier Investments.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.