We Take A Look At Whether ARB Corporation Limited's (ASX:ARB) CEO May Be Underpaid

The impressive results at ARB Corporation Limited (ASX:ARB) recently will be great news for shareholders. At the upcoming AGM on 14 October 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

Check out our latest analysis for ARB

How Does Total Compensation For Andrew Brown Compare With Other Companies In The Industry?

At the time of writing, our data shows that ARB Corporation Limited has a market capitalization of AU$3.8b, and reported total annual CEO compensation of AU$460k for the year to June 2021. We note that's an increase of 17% above last year. We note that the salary portion, which stands at AU$368.3k constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the industry with market capitalizations between AU$2.8b and AU$8.8b, we discovered that the median CEO total compensation of that group was AU$3.1m. That is to say, Andrew Brown is paid under the industry median. Moreover, Andrew Brown also holds AU$834k worth of ARB stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	AU$368k	AU$311k	80%
Other	AU$92k	AU$84k	20%
Total Compensation	AU$460k	AU$395k	100%

Talking in terms of the industry, salary represented approximately 79% of total compensation out of all the companies we analyzed, while other remuneration made up 21% of the pie. There isn't a significant difference between ARB and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ARB Corporation Limited's Growth

Over the past three years, ARB Corporation Limited has seen its earnings per share (EPS) grow by 29% per year. Its revenue is up 34% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has ARB Corporation Limited Been A Good Investment?

Boasting a total shareholder return of 182% over three years, ARB Corporation Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for ARB that investors should look into moving forward.

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.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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