Stock Analysis

Shareholders Will Probably Not Have Any Issues With IDP Education Limited's (ASX:IEL) CEO Compensation

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The performance at IDP Education Limited (ASX:IEL) has been rather lacklustre of late and shareholders may be wondering what CEO Andrew Barkla is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 18 October 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We think CEO compensation looks appropriate given the data we have put together.

View our latest analysis for IDP Education

Comparing IDP Education Limited's CEO Compensation With the industry

At the time of writing, our data shows that IDP Education Limited has a market capitalization of AU$9.7b, and reported total annual CEO compensation of AU$2.6m for the year to June 2021. Notably, that's an increase of 15% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$946k.

In comparison with other companies in the industry with market capitalizations ranging from AU$5.4b to AU$16b, the reported median CEO total compensation was AU$3.9m. That is to say, Andrew Barkla is paid under the industry median. What's more, Andrew Barkla holds AU$8.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20212020Proportion (2021)
Salary AU$946k AU$973k 37%
Other AU$1.6m AU$1.3m 63%
Total CompensationAU$2.6m AU$2.2m100%

On an industry level, around 62% of total compensation represents salary and 38% is other remuneration. It's interesting to note that IDP Education allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ASX:IEL CEO Compensation October 12th 2021

IDP Education Limited's Growth

Over the last three years, IDP Education Limited has shrunk its earnings per share by 12% per year. Its revenue is down 9.9% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has IDP Education Limited Been A Good Investment?

We think that the total shareholder return of 261%, over three years, would leave most IDP Education Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean these strong returns may not continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for IDP Education that investors should think about before committing capital to this stock.

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.

Valuation is complex, but we're helping make it simple.

Find out whether IDP Education is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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