We Take A Look At Why Johns Lyng Group Limited's (ASX:JLG) CEO Compensation Is Well Earned

We have been pretty impressed with the performance at Johns Lyng Group Limited (ASX:JLG) recently and CEO Scott Didier deserves a mention for their role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 18 November 2021. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

View our latest analysis for Johns Lyng Group

Comparing Johns Lyng Group Limited's CEO Compensation With the industry

According to our data, Johns Lyng Group Limited has a market capitalization of AU$1.5b, and paid its CEO total annual compensation worth AU$1.1m over the year to June 2021. Notably, that's an increase of 14% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$443k.

On examining similar-sized companies in the industry with market capitalizations between AU$543m and AU$2.2b, we discovered that the median CEO total compensation of that group was AU$1.2m. So it looks like Johns Lyng Group compensates Scott Didier in line with the median for the industry. Moreover, Scott Didier also holds AU$365m worth of Johns Lyng Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	AU$443k	AU$480k	40%
Other	AU$669k	AU$495k	60%
Total Compensation	AU$1.1m	AU$975k	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. It's interesting to note that Johns Lyng Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Johns Lyng Group Limited's Growth

Johns Lyng Group Limited's earnings per share (EPS) grew 15% per year over the last three years. Its revenue is up 15% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Johns Lyng Group Limited Been A Good Investment?

We think that the total shareholder return of 762%, over three years, would leave most Johns Lyng 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...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

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. We've identified 1 warning sign for Johns Lyng Group that investors should be aware of in a dynamic business environment.

Switching gears from Johns Lyng Group, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.