Is Aveo Group’s (ASX:AOG) CEO Pay Justified?

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Geoff Grady became the CEO of Aveo Group (ASX:AOG) in 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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.

View our latest analysis for Aveo Group

How Does Geoff Grady’s Compensation Compare With Similar Sized Companies?

According to our data, Aveo Group has a market capitalization of AU$1.2b, and pays its CEO total annual compensation worth AU$2.4m. (This figure is for the year to June 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$705k. We examined companies with market caps from AU$572m to AU$2.3b, and discovered that the median CEO total compensation of that group was AU$1.3m.

It would therefore appear that Aveo Group pays Geoff Grady 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 get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Aveo Group has changed from year to year.

ASX:AOG CEO Compensation, May 15th 2019
ASX:AOG CEO Compensation, May 15th 2019

Is Aveo Group Growing?

Aveo Group has increased its earnings per share (EPS) by an average of 29% a year, over the last three years (using a line of best fit). It saw its revenue drop -15% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.

Has Aveo Group Been A Good Investment?

Given the total loss of 34% over three years, many shareholders in Aveo Group are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We compared total CEO remuneration at Aveo Group with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we’d need more time to form a view on CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Aveo Group.

If you want to buy a stock that is better than Aveo Group, this free list of high return, low debt companies is a great place to look.

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.