How Should Investors React To Matrix Composites & Engineering Ltd’s (ASX:MCE) CEO Pay?

In 2009 Aaron Begley was appointed CEO of Matrix Composites & Engineering Ltd (ASX:MCE). First, this article will compare CEO compensation with compensation at similar sized companies. 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 process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Matrix Composites & Engineering

How Does Aaron Begley’s Compensation Compare With Similar Sized Companies?

According to our data, Matrix Composites & Engineering Ltd has a market capitalization of AU$41m, and paid its CEO total annual compensation worth AU$663k over the year to June 2019. That’s a modest increase of 4.4% on the prior year year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$466k. We examined a group of similar sized companies, with market capitalizations of below AU$294m. The median CEO total compensation in that group is AU$374k.

It would therefore appear that Matrix Composites & Engineering Ltd pays Aaron Begley 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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. Shareholders might be interested in this free visualization of analyst forecasts.

You can see a visual representation of the CEO compensation at Matrix Composites & Engineering, below.

ASX:MCE CEO Compensation, November 18th 2019
ASX:MCE CEO Compensation, November 18th 2019

Is Matrix Composites & Engineering Ltd Growing?

Matrix Composites & Engineering Ltd has reduced its earnings per share by an average of 4.0% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 95% over the last year.

As investors, we are a bit wary of companies that have lower earnings per share, over three years. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. In conclusion we can’t form a strong opinion about business performance yet; but it’s one worth watching.

Has Matrix Composites & Engineering Ltd Been A Good Investment?

Matrix Composites & Engineering Ltd has generated a total shareholder return of 13% over three years, so most shareholders would be reasonably content. 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 total CEO remuneration at Matrix Composites & Engineering Ltd with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

We generally prefer to see stronger EPS growth, and we’re not particularly impressed with the total shareholder return, over the last three years. So it’s certainly hard to argue that the CEO is modestly paid, although we don’t see the remuneration as an issue. So you may want to check if insiders are buying Matrix Composites & Engineering shares with their own money (free access).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.

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. Thank you for reading.