John Houston has been the CEO of YPB Group Limited (ASX:YPB) since 2017. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does John Houston's Compensation Compare With Similar Sized Companies?
According to our data, YPB Group Limited has a market capitalization of AU$5.1m, and paid its CEO total annual compensation worth AU$527k over the year to December 2019. That's a notable increase of 74% on last year. While we always look at total compensation first, we note that the salary component is less, at AU$180k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined a group of similar sized companies, with market capitalizations of below AU$305m. The median CEO total compensation in that group is AU$388k.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On a sector level, around 78% of total compensation represents salary and 22% is other remuneration. Readers will want to know that YPB Group pays a modest slice of remuneration through salary, as compared to the wider sector.
It would therefore appear that YPB Group Limited pays John Houston more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. The graphic below shows how CEO compensation at YPB Group has changed from year to year.
Is YPB Group Limited Growing?
On average over the last three years, YPB Group Limited has seen earnings per share (EPS) move in a favourable direction by 78% each year (using a line of best fit). Its revenue is down 44% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important. Shareholders might be interested in this free visualization of analyst forecasts.
Has YPB Group Limited Been A Good Investment?
Given the total loss of 96% over three years, many shareholders in YPB Group Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at YPB Group Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. Having said that, shareholders may be disappointed with the weak returns over the last three years. So shareholders might not feel great about the fact that CEO pay increased on last year. While EPS is moving in the right direction, we'd say shareholders would want better returns before the CEO is paid much more. On another note, YPB Group has 5 warning signs (and 4 which don't sit too well with us) we think you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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. Thank you for reading.
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