Rob Velletri became the CEO of Monadelphous Group Limited (ASX:MND) in 2003, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Monadelphous Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Monadelphous Group
Comparing Monadelphous Group Limited's CEO Compensation With the industry
At the time of writing, our data shows that Monadelphous Group Limited has a market capitalization of AU$1.2b, and reported total annual CEO compensation of AU$1.2m for the year to June 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is AU$946.5k, represents most of the total compensation being paid.
For comparison, other companies in the same industry with market capitalizations ranging between AU$541m and AU$2.2b had a median total CEO compensation of AU$1.4m. This suggests that Monadelphous Group remunerates its CEO largely in line with the industry average. Moreover, Rob Velletri also holds AU$27m worth of Monadelphous Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$946k | AU$973k | 78% |
| Other | AU$262k | AU$222k | 22% |
| Total Compensation | AU$1.2m | AU$1.2m | 100% |
Speaking on an industry level, nearly 66% of total compensation represents salary, while the remainder of 34% is other remuneration. According to our research, Monadelphous Group has allocated a higher percentage of pay to salary in comparison to the wider 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.
A Look at Monadelphous Group Limited's Growth Numbers
Over the last three years, Monadelphous Group Limited has shrunk its earnings per share by 14% per year. The trailing twelve months of revenue was pretty much the same as the prior period.
Overall this is not a very positive result for shareholders. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Monadelphous Group Limited Been A Good Investment?
Given the total shareholder loss of 24% over three years, many shareholders in Monadelphous Group Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
As we noted earlier, Monadelphous Group pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Monadelphous Group that investors should think about before committing capital to this stock.
Important note: Monadelphous Group 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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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. 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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About ASX:MND
Monadelphous Group
An engineering group, engages in the provision of construction, maintenance, and industrial services to resources, energy, and infrastructure sectors in Australia, China, Mongolia, Papua New Guinea, China, the Philippines, and internationally.
Excellent balance sheet and fair value.
