This article will reflect on the compensation paid to Andrew Blattman who has served as CEO of IPH Limited (ASX:IPH) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for IPH
How Does Total Compensation For Andrew Blattman Compare With Other Companies In The Industry?
According to our data, IPH Limited has a market capitalization of AU$1.4b, and paid its CEO total annual compensation worth AU$2.4m over the year to June 2020. Notably, that's an increase of 42% over the year before. In particular, the salary of AU$1.23m, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations ranging from AU$515m to AU$2.1b, the reported median CEO total compensation was AU$1.5m. Accordingly, our analysis reveals that IPH Limited pays Andrew Blattman north of the industry median. Moreover, Andrew Blattman also holds AU$737k worth of IPH stock directly under their own name.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$1.2m | AU$879k | 50% |
| Other | AU$1.2m | AU$848k | 50% |
| Total Compensation | AU$2.4m | AU$1.7m | 100% |
On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. It's interesting to note that IPH allocates a smaller portion of compensation to salary in comparison to the broader 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 IPH Limited's Growth Numbers
IPH Limited has seen its earnings per share (EPS) increase by 4.8% a year over the past three years. In the last year, its revenue is up 45%.
We like the look of the strong year-on-year improvement in revenue. With that in mind, the modestly improving EPS seems positive. So while we'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has IPH Limited Been A Good Investment?
IPH Limited has served shareholders reasonably well, with a total return of 29% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
To Conclude...
As we noted earlier, IPH pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company lacks EPS growth, and returns to shareholders are less than stellar, over the last three years. Overall, although the company has delivered steady performance, we would like to see an improvement in key metrics before we can say the high CEO compensation is justified.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for IPH that investors should be aware of in a dynamic business environment.
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.
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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:IPH
Established dividend payer and fair value.
