Is Matrix Composites & Engineering Ltd’s (ASX:MCE) CEO Overpaid Relative To Its Peers?

Aaron Begley has been the CEO of Matrix Composites & Engineering Ltd (ASX:MCE) since 2009. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business 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?

At the time of writing our data says that Matrix Composites & Engineering Ltd has a market cap of AU$38m, and is paying total annual CEO compensation of AU$635k. (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$466k. We looked at a group of companies with market capitalizations under AU$284m, and the median CEO total compensation was AU$354k.

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. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Matrix Composites & Engineering has changed over time.

ASX:MCE CEO Compensation, April 29th 2019
ASX:MCE CEO Compensation, April 29th 2019

Is Matrix Composites & Engineering Ltd Growing?

Over the last three years Matrix Composites & Engineering Ltd has shrunk its earnings per share by an average of 42% per year (measured with a line of best fit). Its revenue is down -14% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.

Has Matrix Composites & Engineering Ltd Been A Good Investment?

Matrix Composites & Engineering Ltd has not done too badly by shareholders, with a total return of 2.8%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

We examined the amount Matrix Composites & Engineering Ltd pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

And while shareholder returns have been respectable, they have hardly been superb. So we doubt many shareholders would consider the CEO pay to be particularly modest! Shareholders may want to check for free if Matrix Composites & Engineering insiders are buying or selling shares.

If you want to buy a stock that is better than Matrix Composites & Engineering, 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.