How Should Investors Feel About Vita Group Limited's (ASX:VTG) CEO Pay?

Maxine Horne became the CEO of Vita Group Limited (ASX:VTG) in 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Vita Group

How Does Maxine Horne's Compensation Compare With Similar Sized Companies?

According to our data, Vita Group Limited has a market capitalization of AU$178m, and paid its CEO total annual compensation worth AU$1.4m over the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$860k. We took a group of companies with market capitalizations below AU$291m, and calculated the median CEO total compensation to be AU$379k.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Vita Group stands. On an industry level, roughly 64% of total compensation represents salary and 36% is other remuneration. So it seems like there isn't a significant difference between Vita Group and the broader market, in terms of salary allocation in the overall compensation package.

It would therefore appear that Vita Group Limited pays Maxine Horne more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see, below, how CEO compensation at Vita Group has changed over time.

Is Vita Group Limited Growing?

Over the last three years Vita Group Limited has shrunk its earnings per share by an average of 23% per year (measured with a line of best fit). It achieved revenue growth of 10% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Vita Group Limited Been A Good Investment?

Vita Group Limited has served shareholders reasonably well, with a total return of 20% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

We compared the total CEO remuneration paid by Vita Group Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

We think many shareholders would be underwhelmed with the business growth over the last three years. And shareholder returns are decent but not great. So we doubt many shareholders would consider the CEO pay to be particularly modest! Moving away from CEO compensation for the moment, we've identified 1 warning sign for Vita Group that you should be aware of before investing.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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.