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Jeanne Johns has been the CEO of Incitec Pivot Limited (ASX:IPL) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Incitec Pivot.
Check out our latest analysis for Incitec Pivot
How Does Total Compensation For Jeanne Johns Compare With Other Companies In The Industry?
At the time of writing, our data shows that Incitec Pivot Limited has a market capitalization of AU$4.0b, and reported total annual CEO compensation of AU$3.2m for the year to September 2019. That's a notable decrease of 17% on last year. In particular, the salary of AU$1.63m, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar companies from the same industry with market caps ranging from AU$2.7b to AU$8.8b, we found that the median CEO total compensation was AU$3.2m. So it looks like Incitec Pivot compensates Jeanne Johns in line with the median for the industry. Moreover, Jeanne Johns also holds AU$1.3m worth of Incitec Pivot stock directly under their own name.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | AU$1.6m | AU$1.4m | 51% |
| Other | AU$1.6m | AU$2.5m | 49% |
| Total Compensation | AU$3.2m | AU$3.9m | 100% |
Speaking on an industry level, nearly 73% of total compensation represents salary, while the remainder of 27% is other remuneration. In Incitec Pivot's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Incitec Pivot Limited's Growth Numbers
Over the last three years, Incitec Pivot Limited has shrunk its earnings per share by 9.6% per year. It achieved revenue growth of 2.7% over the last year.
Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Incitec Pivot Limited Been A Good Investment?
Given the total shareholder loss of 37% over three years, many shareholders in Incitec Pivot Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude...
As we touched on above, Incitec Pivot Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 2 warning signs for Incitec Pivot (1 is potentially serious!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking at a different set of stocks. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
About ASX:DNL
Dyno Nobel
Manufactures and distributes industrial explosives, chemicals, and fertilizers in the United States and Australia.
Adequate balance sheet with limited growth.
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