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Mike Salisbury has been the CEO of McMillan Shakespeare Limited (ASX:MMS) since 2014. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Mike Salisbury’s Compensation Compare With Similar Sized Companies?
Our data indicates that McMillan Shakespeare Limited is worth AU$1.3b, and total annual CEO compensation is AU$1.2m. (This figure is for the year to 2018). While we always look at total compensation first, we note that the salary component is less, at AU$798k. When we examined a selection of companies with market caps ranging from AU$551m to AU$2.2b, we found the median CEO compensation was AU$1.7m.
So Mike Salisbury 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 McMillan Shakespeare has changed from year to year.
Is McMillan Shakespeare Limited Growing?
Over the last three years McMillan Shakespeare Limited has shrunk its earnings per share by an average of 11% per year (measured with a line of best fit). In the last year, its revenue is up 4.2%.
Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has McMillan Shakespeare Limited Been A Good Investment?
I think that the total shareholder return of 56%, over three years, would leave most McMillan Shakespeare Limited shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
Mike Salisbury is paid around what is normal the leaders of comparable size companies.
We feel that earnings per share have been a bit disappointing, but it’s nice to see positive shareholder returns over the last three years. So we think most shareholders wouldn’t be too worried about CEO compensation, which is close to the median for similar sized companies. Shareholders may want to check for free if McMillan Shakespeare insiders are buying or selling shares.
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.