Stock Analysis

ALS Limited's (ASX:ALQ) CEO Looks Due For A Compensation Raise

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The impressive results at ALS Limited (ASX:ALQ) recently will be great news for shareholders. At the upcoming AGM on 28 July 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

View our latest analysis for ALS

How Does Total Compensation For Raj Naran Compare With Other Companies In The Industry?

According to our data, ALS Limited has a market capitalization of AU$6.0b, and paid its CEO total annual compensation worth AU$2.9m over the year to March 2021. We note that's a small decrease of 3.2% on last year. Notably, the salary which is AU$1.57m, represents a considerable chunk of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from AU$2.7b to AU$8.7b, the reported median CEO total compensation was AU$7.8m. This suggests that Raj Naran is paid below the industry median. Moreover, Raj Naran also holds AU$4.6m worth of ALS stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary AU$1.6m AU$1.7m 54%
Other AU$1.3m AU$1.3m 46%
Total CompensationAU$2.9m AU$3.0m100%

Speaking on an industry level, nearly 68% of total compensation represents salary, while the remainder of 32% is other remuneration. In ALS' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ASX:ALQ CEO Compensation July 21st 2021

A Look at ALS Limited's Growth Numbers

ALS Limited has seen its earnings per share (EPS) increase by 40% a year over the past three years. In the last year, its revenue is down 5.0%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has ALS Limited Been A Good Investment?

We think that the total shareholder return of 74%, over three years, would leave most ALS Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at 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.

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 1 warning sign for ALS that investors should look into moving forward.

Important note: ALS 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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