Is Zip Co Limited's (ASX:Z1P) CEO Paid At A Competitive Rate?
The CEO of Zip Co Limited (ASX:Z1P) is Larry Diamond. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Zip Co
How Does Larry Diamond's Compensation Compare With Similar Sized Companies?
According to our data, Zip Co Limited has a market capitalization of AU$1.5b, and paid its CEO total annual compensation worth AU$590k over the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$350k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$598m to AU$2.4b. The median total CEO compensation was AU$1.4m.
A first glance this seems like a real positive for shareholders, since Larry Diamond is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see a visual representation of the CEO compensation at Zip Co, below.
Is Zip Co Limited Growing?
Zip Co Limited has increased its earnings per share (EPS) by an average of 7.7% a year, over the last three years (using a line of best fit). It achieved revenue growth of 111% over the last year.
It's great to see that revenue growth is strong. With that in mind, the modestly improving EPS seems positive. I'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. Shareholders might be interested in this free visualization of analyst forecasts.
Has Zip Co Limited Been A Good Investment?
Most shareholders would probably be pleased with Zip Co Limited for providing a total return of 428% over three years. 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.
In Summary...
It appears that Zip Co Limited remunerates its CEO below most similar sized companies.
Larry Diamond receives relatively low remuneration compared to similar sized companies. And the returns to shareholders were great, over the last few years. So, while it might be nice to have better EPS growth, on our analysis the CEO compensation is quite modest. So you may want to check if insiders are buying Zip Co shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.
