Most Shareholders Will Probably Find That The CEO Compensation For IPH Limited (ASX:IPH) Is Reasonable

Performance at IPH Limited (ASX:IPH) has been reasonably good and CEO Andrew Blattman has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 17 November 2021. Here is our take on why we think the CEO compensation looks appropriate.

View our latest analysis for IPH

Comparing IPH Limited's CEO Compensation With the industry

According to our data, IPH Limited has a market capitalization of AU$1.9b, and paid its CEO total annual compensation worth AU$2.4m over the year to June 2021. That's mostly flat as compared to the prior year's compensation. In particular, the salary of AU$1.23m, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from AU$1.4b to AU$4.3b, we found that the median CEO total compensation was AU$2.3m. From this we gather that Andrew Blattman is paid around the median for CEOs in the industry. Moreover, Andrew Blattman also holds AU$2.1m worth of IPH stock directly under their own name.

Component	2021	2020	Proportion (2021)
Salary	AU$1.2m	AU$1.2m	50%
Other	AU$1.2m	AU$1.2m	50%
Total Compensation	AU$2.4m	AU$2.4m	100%

Speaking on an industry level, nearly 79% of total compensation represents salary, while the remainder of 21% is other remuneration. IPH sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

IPH Limited's Growth

IPH Limited has seen its earnings per share (EPS) increase by 5.7% a year over the past three years. In the last year, its revenue is down 1.6%.

We would prefer it if there was revenue growth, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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?

Boasting a total shareholder return of 83% over three years, IPH Limited has done well by shareholders. 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.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for IPH that investors should be aware of in a dynamic business environment.

Switching gears from IPH, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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