Stock Analysis

How Much Is Austin Engineering Limited (ASX:ANG) CEO Getting Paid?

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Peter Forsyth has been the CEO of Austin Engineering Limited (ASX:ANG) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

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Comparing Austin Engineering Limited's CEO Compensation With the industry

Our data indicates that Austin Engineering Limited has a market capitalization of AU$101m, and total annual CEO compensation was reported as AU$725k for the year to June 2020. That's a slight decrease of 6.4% on the prior year. We note that the salary portion, which stands at AU$502.8k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$261m, we found that the median total CEO compensation was AU$350k. Accordingly, our analysis reveals that Austin Engineering Limited pays Peter Forsyth north of the industry median. What's more, Peter Forsyth holds AU$201k worth of shares in the company in their own name.

Component20202019Proportion (2020)
Salary AU$503k AU$490k 69%
Other AU$222k AU$285k 31%
Total CompensationAU$725k AU$775k100%

On an industry level, roughly 84% of total compensation represents salary and 16% is other remuneration. Austin Engineering pays a modest slice of remuneration through salary, as compared 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.

ASX:ANG CEO Compensation January 31st 2021

Austin Engineering Limited's Growth

Austin Engineering Limited has seen its earnings per share (EPS) increase by 110% a year over the past three years. Revenue was pretty flat on last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Austin Engineering Limited Been A Good Investment?

With a three year total loss of 30% for the shareholders, Austin Engineering Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we touched on above, Austin Engineering Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, we must not forget that the EPS growth has been very strong, but it's disappointing to see negative shareholder returns over the same period. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.

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 2 warning signs for Austin Engineering that you should be aware of before investing.

Important note: Austin Engineering 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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