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In 2015 Nick Waterworth was appointed CEO of Ambition Group Limited (ASX:AMB). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Nick Waterworth’s Compensation Compare With Similar Sized Companies?
According to our data, Ambition Group Limited has a market capitalization of AU$6.1m, and pays its CEO total annual compensation worth AU$345k. (This figure is for the year to December 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$310k. We took a group of companies with market capitalizations below AU$287m, and calculated the median CEO total compensation to be AU$352k.
So Nick Waterworth is paid around the average of the companies we looked at. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
The graphic below shows how CEO compensation at Ambition Group has changed from year to year.
Is Ambition Group Limited Growing?
Ambition Group Limited has reduced its earnings per share by an average of 69% a year, over the last three years (measured with a line of best fit). Its revenue is up 12% over last year.
Unfortunately, earnings per share have trended lower over the last three years. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.
Has Ambition Group Limited Been A Good Investment?
Since shareholders would have lost about 39% over three years, some Ambition Group Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
Remuneration for Nick Waterworth is close enough to the median pay for a CEO of a similar sized company .
The company isn’t growing EPS, and shareholder returns have been disappointing. Few would argue that it’s wise for the company to pay any more, before returns improve. Whatever your view on compensation, you might want to check if insiders are buying or selling Ambition Group shares (free trial).
Important note: Ambition Group may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.