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Why We Think IPH Limited's (ASX:IPH) CEO Compensation Is Not Excessive At All

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  • IPHLF

CEO Andrew Blattman has done a decent job of delivering relatively good performance at IPH Limited (ASX:IPH) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 17 November 2021. We present our case of why we think CEO compensation looks fair.

See our latest analysis for IPH

Comparing IPH Limited's CEO Compensation With the industry

According to our data, IPH Limited has a market capitalization of AU$1.9b, and paid its CEO total annual compensation worth AU$2.4m over the year to June 2021. That is, the compensation was roughly the same as last year. We note that the salary of AU$1.23m makes up a sizeable portion of the total compensation received by the CEO.

On examining similar-sized companies in the industry with market capitalizations between AU$1.4b and AU$4.3b, we discovered that the median CEO total compensation of that group was AU$2.3m. From this we gather that Andrew Blattman is paid around the median for CEOs in the industry. Moreover, Andrew Blattman also holds AU$2.1m worth of IPH stock directly under their own name.

Component

2021

2020

Proportion (2021)

Salary

AU$1.2m

AU$1.2m

50%

Other

AU$1.2m

AU$1.2m

50%

Total Compensation

AU$2.4m

AU$2.4m

100%

Talking in terms of the industry, salary represented approximately 79% of total compensation out of all the companies we analyzed, while other remuneration made up 21% of the pie. It's interesting to note that IPH allocates a smaller portion of compensation to salary in comparison to the broader industry. 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.

ceo-compensation
ceo-compensation

A Look at IPH Limited's Growth Numbers

Over the past three years, IPH Limited has seen its earnings per share (EPS) grow by 5.7% per year. In the last year, its revenue is down 1.6%.

We generally like to see a little revenue growth, but the modest EPS growth gives us some relief. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has IPH Limited Been A Good Investment?

Most shareholders would probably be pleased with IPH Limited for providing a total return of 83% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay 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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for IPH that investors should think about before committing capital to this stock.

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.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.