James Embelton became the CEO of Embelton Limited (ASX:EMB) in 2010. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does James Embelton’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Embelton Limited has a market cap of AU$28m, and is paying total annual CEO compensation of AU$496k. (This is based on the year to 2018). That’s a notable increase of 9.5% on last year. We think total compensation is more important but we note that the CEO salary is lower, at AU$343k. We examined a group of similar sized companies, with market capitalizations of below AU$277m. The median CEO compensation in that group is AU$363k.
It would therefore appear that Embelton Limited pays James Embelton more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. Take a look at Embelton’s key growth metrics by clicking on this link to view earnings, revenue and cash flow.
You can see, below, how CEO compensation at Embelton has changed over time.
Is Embelton Limited Growing?
Over the last three years Embelton Limited has grown its earnings per share (EPS) by an average of 19% per year. Its revenue is up 34% over last year.
This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see.
Has Embelton Limited Been A Good Investment?
Boasting a total shareholder return of 103% over three years, Embelton Limited has done well by shareholders. So they may not be at all concerned if the CEO is paid more than is normal for companies around the same size.
We examined the amount Embelton Limited pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. So you may want to check if insiders are buying Embelton shares with their own money (free access).
If you want to buy a stock that is better than Embelton, this free list of high return, low debt companies is a great place to look.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.