Steven Boland became the CEO of Acrow Formwork and Construction Services Limited (ASX:ACF) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Acrow Formwork and Construction Services pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Acrow Formwork and Construction Services
Comparing Acrow Formwork and Construction Services Limited's CEO Compensation With the industry
At the time of writing, our data shows that Acrow Formwork and Construction Services Limited has a market capitalization of AU$81m, and reported total annual CEO compensation of AU$907k for the year to June 2020. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at AU$505.0k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$281m, the reported median total CEO compensation was AU$492k. Hence, we can conclude that Steven Boland is remunerated higher than the industry median. Furthermore, Steven Boland directly owns AU$1.5m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$505k | AU$480k | 56% |
| Other | AU$402k | AU$407k | 44% |
| Total Compensation | AU$907k | AU$887k | 100% |
On an industry level, roughly 66% of total compensation represents salary and 34% is other remuneration. Acrow Formwork and Construction Services sets aside a smaller share of compensation for salary, in comparison to the overall 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.
Acrow Formwork and Construction Services Limited's Growth
Over the last three years, Acrow Formwork and Construction Services Limited has not seen its earnings per share change much, though there is a slight positive movement. In the last year, its revenue is up 19%.
We would argue that the modest growth in revenue is a notable positive. And the improvement in EPSis modest but respectable. So while performance isn't amazing, we think it really does seem quite respectable. 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 Acrow Formwork and Construction Services Limited Been A Good Investment?
Most shareholders would probably be pleased with Acrow Formwork and Construction Services Limited for providing a total return of 137% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
As previously discussed, Steven is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Importantly though, shareholder returns for the last three years have been excellent. Albeit, EPS growth has not been as impressive over the same time frame. So, although we would've liked to see stronger EPS growth, positive investor returns lead us to believe CEO compensation is reasonable.
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 5 warning signs for Acrow Formwork and Construction Services that investors should look into moving forward.
Important note: Acrow Formwork and Construction Services is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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Access Free AnalysisThis 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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