Mark Allison has been the CEO of Elders Limited (ASX:ELD) since 2014. 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. This process should give us an idea about how appropriately the CEO is paid.
How Does Mark Allison's Compensation Compare With Similar Sized Companies?
Our data indicates that Elders Limited is worth AU$1.6b, and total annual CEO compensation was reported as AU$1.7m for the year to September 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$896k. We looked at a group of companies with market capitalizations from AU$615m to AU$2.5b, and the median CEO total compensation was AU$1.5m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 57% of total compensation represents salary and 43% is other remuneration. So it seems like there isn't a significant difference between Elders and the broader market, in terms of salary allocation in the overall compensation package.
So Mark Allison is paid around the average of the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. The graphic below shows how CEO compensation at Elders has changed from year to year.
Is Elders Limited Growing?
Over the last three years Elders Limited has shrunk its earnings per share by an average of 8.2% per year (measured with a line of best fit). Its revenue is up 4.2% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Elders Limited Been A Good Investment?
I think that the total shareholder return of 134%, over three years, would leave most Elders Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
Mark Allison is paid around the same as most CEOs of similar size companies.
We're not seeing great strides in earnings per share, but the company has clearly pleased some investors, given the returns over the last three years. So we can't see a reason to suggest the pay is inappropriate. Moving away from CEO compensation for the moment, we've identified 2 warning signs for Elders that you should be aware of before investing.
If you want to buy a stock that is better than Elders, this free list of high return, low debt companies is a great place to look.
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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. Thank you for reading.