Here's Why Shareholders May Want To Be Cautious With Increasing Monadelphous Group Limited's (ASX:MND) CEO Pay Packet

The underwhelming share price performance of Monadelphous Group Limited (ASX:MND) in the past three years would have disappointed many shareholders. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. Shareholders will have a chance to take their concerns to the board at the next AGM on 23 November 2021 and vote on resolutions including executive compensation, which studies show may have an impact on company performance. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

Check out our latest analysis for Monadelphous Group

How Does Total Compensation For Rob Velletri Compare With Other Companies In The Industry?

According to our data, Monadelphous Group Limited has a market capitalization of AU$885m, and paid its CEO total annual compensation worth AU$1.2m over the year to June 2021. That's a slight decrease of 3.5% on the prior year. Notably, the salary which is AU$915.2k, represents most of the total compensation being paid.

For comparison, other companies in the same industry with market capitalizations ranging between AU$543m and AU$2.2b had a median total CEO compensation of AU$1.2m. From this we gather that Rob Velletri is paid around the median for CEOs in the industry. Furthermore, Rob Velletri directly owns AU$20m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	AU$915k	AU$946k	79%
Other	AU$251k	AU$262k	21%
Total Compensation	AU$1.2m	AU$1.2m	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Monadelphous Group is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Monadelphous Group Limited's Growth

Over the last three years, Monadelphous Group Limited has shrunk its earnings per share by 13% per year. Its revenue is up 18% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Monadelphous Group Limited Been A Good Investment?

Since shareholders would have lost about 27% over three years, some Monadelphous Group Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Monadelphous Group that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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.

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