How Is Group's (ASX:PTB) CEO Compensated?

Stephen Smith became the CEO of PTB Group Limited (ASX:PTB) in 2017, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Group

How Does Total Compensation For Stephen Smith Compare With Other Companies In The Industry?

Our data indicates that PTB Group Limited has a market capitalization of AU$84m, and total annual CEO compensation was reported as AU$580k for the year to June 2020. We note that's an increase of 32% above last year. It is worth noting that the CEO compensation consists entirely of the salary, worth AU$580k.

For comparison, other companies in the industry with market capitalizations below AU$258m, reported a median total CEO compensation of AU$654k. This suggests that Group remunerates its CEO largely in line with the industry average. Moreover, Stephen Smith also holds AU$3.9m worth of Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 51% of total compensation represents salary and 49% is other remuneration. Speaking on a company level, Group prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at PTB Group Limited's Growth Numbers

PTB Group Limited has reduced its earnings per share by 8.6% a year over the last three years. In the last year, its revenue is up 52%.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 PTB Group Limited Been A Good Investment?

With a total shareholder return of 27% over three years, PTB Group Limited shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Group pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we noted earlier, Group pays its CEO in line with similar-sized companies belonging to the same industry. But revenue growth for the company has been quite positive recently. That's why we were hoping for more robust shareholder returns at this time. EPS growth is a further sore spot — the metric is negative over the last three years. We wouldn't say compensation is inappropriate considering the stable performance, but shareholders might want to see some better numbers before warming to the idea of a bump.

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 did our research and spotted 4 warning signs for Group that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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