John Schaffer has been the CEO of Schaffer Corporation Limited (ASX:SFC) since 1987, 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 Schaffer.
Check out our latest analysis for Schaffer
How Does Total Compensation For John Schaffer Compare With Other Companies In The Industry?
At the time of writing, our data shows that Schaffer Corporation Limited has a market capitalization of AU$233m, and reported total annual CEO compensation of AU$1.4m for the year to June 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at AU$847.1k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the same industry with market capitalizations ranging between AU$136m and AU$544m had a median total CEO compensation of AU$535k. Hence, we can conclude that John Schaffer is remunerated higher than the industry median. Moreover, John Schaffer also holds AU$31m worth of Schaffer stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$847k | AU$872k | 61% |
| Other | AU$545k | AU$522k | 39% |
| Total Compensation | AU$1.4m | AU$1.4m | 100% |
On an industry level, roughly 79% of total compensation represents salary and 21% is other remuneration. In Schaffer's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Schaffer Corporation Limited's Growth
Over the past three years, Schaffer Corporation Limited has seen its earnings per share (EPS) grow by 50% per year. Its revenue is down 24% over the previous year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Schaffer Corporation Limited Been A Good Investment?
We think that the total shareholder return of 87%, over three years, would leave most Schaffer Corporation Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
To Conclude...
As previously discussed, John is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Importantly though, EPS growth and shareholder returns are very impressive over the last three years. As a result of the excellent all-round performance of the company, we believe CEO compensation is fair. The pleasing shareholder returns are the cherry on top. We wouldn't be wrong in saying that shareholders feel that John's performance creates value for the company.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 3 warning signs for Schaffer that you should be aware of before investing.
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.
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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.
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About ASX:SFC
Schaffer
A diversified industrial and investment company, engages in the manufacture and sale of automotive leather and building materials primarily in Australia, Asia, and Europe.
Flawless balance sheet, good value and pays a dividend.
