Andrew Elf has been the CEO of Mitchell Services Limited (ASX:MSV) since 2014, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Andrew Elf Compare With Other Companies In The Industry?
Our data indicates that Mitchell Services Limited has a market capitalization of AU$104m, and total annual CEO compensation was reported as AU$706k for the year to June 2020. That’s just a smallish increase of 5.1% on last year. In particular, the salary of AU$400.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below AU$275m, reported a median total CEO compensation of AU$302k. Accordingly, our analysis reveals that Mitchell Services Limited pays Andrew Elf north of the industry median. What’s more, Andrew Elf holds AU$409k worth of shares in the company in their own name.
Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. Mitchell Services sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion – which is generally tied to performance, is lower.
A Look at Mitchell Services Limited’s Growth Numbers
Mitchell Services Limited has seen its earnings per share (EPS) increase by 81% a year over the past three years. Its revenue is up 46% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Mitchell Services Limited Been A Good Investment?
Boasting a total shareholder return of 49% over three years, Mitchell Services Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we noted earlier, Mitchell Services pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But EPS growth and shareholder returns have been top-notch for the past three years. So, in acknowledgment of the overall excellent performance, we believe CEO compensation is appropriate. The pleasing shareholder returns are the cherry on top. We wouldn’t be wrong in saying that shareholders feel that Andrew’s performance creates value for the company.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 4 warning signs for Mitchell Services that investors should look into moving forward.
Important note: Mitchell Services is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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.
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