This Is Why Australian Agricultural Company Limited's (ASX:AAC) CEO Compensation Looks Appropriate
CEO Hugh Killen has done a decent job of delivering relatively good performance at Australian Agricultural Company Limited (ASX:AAC) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 29 July 2021. Here is our take on why we think the CEO compensation looks appropriate.
View our latest analysis for Australian Agricultural
How Does Total Compensation For Hugh Killen Compare With Other Companies In The Industry?
According to our data, Australian Agricultural Company Limited has a market capitalization of AU$841m, and paid its CEO total annual compensation worth AU$949k over the year to March 2021. That's a notable increase of 23% on last year. We note that the salary portion, which stands at AU$647.8k constitutes the majority of total compensation received by the CEO.
On examining similar-sized companies in the industry with market capitalizations between AU$545m and AU$2.2b, we discovered that the median CEO total compensation of that group was AU$966k. This suggests that Australian Agricultural remunerates its CEO largely in line with the industry average. What's more, Hugh Killen holds AU$395k worth of shares in the company in their own name.
Component | 2021 | 2020 | Proportion (2021) |
Salary | AU$648k | AU$643k | 68% |
Other | AU$301k | AU$131k | 32% |
Total Compensation | AU$949k | AU$774k | 100% |
Talking in terms of the industry, salary represented approximately 81% of total compensation out of all the companies we analyzed, while other remuneration made up 19% of the pie. In Australian Agricultural's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Australian Agricultural Company Limited's Growth
Australian Agricultural Company Limited has seen its earnings per share (EPS) increase by 89% a year over the past three years. In the last year, its revenue is down 21%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Australian Agricultural Company Limited Been A Good Investment?
Australian Agricultural Company Limited has generated a total shareholder return of 5.7% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.
In Summary...
The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 2 warning signs for Australian Agricultural (1 is concerning!) that you should be aware of before investing here.
Switching gears from Australian Agricultural, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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