Should You Worry About GWA Group Limited’s (ASX:GWA) CEO Pay Cheque?

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Tim Salt became the CEO of GWA Group Limited (ASX:GWA) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. 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.

Check out our latest analysis for GWA Group

How Does Tim Salt’s Compensation Compare With Similar Sized Companies?

According to our data, GWA Group Limited has a market capitalization of AU$884m, and pays its CEO total annual compensation worth AU$1.9m. (This figure is for the year to June 2018). While we always look at total compensation first, we note that the salary component is less, at AU$1.0m. We looked at a group of companies with market capitalizations from AU$574m to AU$2.3b, and the median CEO total compensation was AU$1.3m.

It would therefore appear that GWA Group Limited pays Tim Salt 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.

You can see a visual representation of the CEO compensation at GWA Group, below.

ASX:GWA CEO Compensation, May 11th 2019
ASX:GWA CEO Compensation, May 11th 2019

Is GWA Group Limited Growing?

Over the last three years GWA Group Limited has grown its earnings per share (EPS) by an average of 3.6% per year (using a line of best fit). Its revenue is up 19% over last year.

I would argue that the modest growth in revenue is a notable positive. And the improvement in earnings per share is modest but respectable. So while we’d stop just short of calling this a top performer, but we think it is well worth watching. It could be important to check this free visual depiction of what analysts expect for the future.

Has GWA Group Limited Been A Good Investment?

I think that the total shareholder return of 69%, over three years, would leave most GWA Group 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.

In Summary…

We compared the total CEO remuneration paid by GWA Group Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

One might like to have seen stronger growth, but shareholder returns have been pleasing, over the last three years. As a result of the juicy return to investors, the CEO remuneration may well be quite reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling GWA Group (free visualization of insider trades).

If you want to buy a stock that is better than GWA Group, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.