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Should You Worry About Australian Agricultural Projects Ltd's (ASX:AAP) CEO Pay?

Simply Wall St

In 2007 Paul Challis was appointed CEO of Australian Agricultural Projects Ltd (ASX:AAP). First, this article will compare CEO compensation with compensation at similar sized companies. 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. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Australian Agricultural Projects

How Does Paul Challis's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Australian Agricultural Projects Ltd has a market cap of AU$2.0m, and reported total annual CEO compensation of AU$157k for the year to June 2019. That's a fairly small increase of 0.9% on year before. We think total compensation is more important but we note that the CEO salary is lower, at AU$140k. We examined a group of similar sized companies, with market capitalizations of below AU$292m. The median CEO total compensation in that group is AU$380k.

A first glance this seems like a real positive for shareholders, since Paul Challis is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.

You can see a visual representation of the CEO compensation at Australian Agricultural Projects, below.

ASX:AAP CEO Compensation, December 19th 2019

Is Australian Agricultural Projects Ltd Growing?

Over the last three years Australian Agricultural Projects Ltd has shrunk its earnings per share by an average of 100% per year (measured with a line of best fit). It achieved revenue growth of 48% over the last year.

Investors should note that, over three years, earnings per share are down. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Australian Agricultural Projects Ltd Been A Good Investment?

With a three year total loss of 65%, Australian Agricultural Projects Ltd would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Australian Agricultural Projects Ltd is currently paying its CEO below what is normal for companies of its size.

It's well worth noting that while Paul Challis is paid less than most company leaders (at similar sized companies), performance has been somewhat uninspiring, and total returns have been lacking. Many shareholders would probably like to see improvements, but our analysis does not suggest that CEO compensation is too generous. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Australian Agricultural Projects (free visualization of insider trades).

If you want to buy a stock that is better than Australian Agricultural Projects, this free list of high return, low debt companies is a great place to look.

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.

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. Thank you for reading.