We Think The Compensation For MyState Limited's (ASX:MYS) CEO Looks About Right

Despite MyState Limited's (ASX:MYS) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. The upcoming AGM on 19 October 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for MyState

How Does Total Compensation For Melos Sulicich Compare With Other Companies In The Industry?

At the time of writing, our data shows that MyState Limited has a market capitalization of AU$538m, and reported total annual CEO compensation of AU$1.1m for the year to June 2021. Notably, that's an increase of 53% over the year before. In particular, the salary of AU$623.1k, makes up a fairly large portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between AU$272m and AU$1.1b had a median total CEO compensation of AU$1.3m. This suggests that MyState remunerates its CEO largely in line with the industry average. Furthermore, Melos Sulicich directly owns AU$737k worth of shares in the company.

Component	2021	2020	Proportion (2021)
Salary	AU$623k	AU$600k	57%
Other	AU$463k	AU$108k	43%
Total Compensation	AU$1.1m	AU$708k	100%

On an industry level, roughly 56% of total compensation represents salary and 44% is other remuneration. MyState is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at MyState Limited's Growth Numbers

Earnings per share at MyState Limited are much the same as they were three years ago, albeit slightly lower. In the last year, its revenue is up 13%.

Its a bit disappointing to see that the company has failed to grow its EPS. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has MyState Limited Been A Good Investment?

MyState Limited has generated a total shareholder return of 23% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for MyState (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.

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.

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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