We Think Shareholders Are Less Likely To Approve A Large Pay Rise For AMP Limited's (ASX:AMP) CEO For Now

Key Insights

• AMP will host its Annual General Meeting on 12th of April
• Total pay for CEO Alexis George includes AU$1.67m salary
• Total compensation is 32% above industry average
• Over the past three years, AMP's EPS fell by 23% and over the past three years, the total loss to shareholders 5.2%

In the past three years, shareholders of AMP Limited (ASX:AMP) have seen a loss on their investment. Per share earnings growth is also lacking, despite revenue growth. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 12th of April, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

Check out our latest analysis for AMP

Comparing AMP Limited's CEO Compensation With The Industry

Our data indicates that AMP Limited has a market capitalization of AU$3.1b, and total annual CEO compensation was reported as AU$4.0m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$1.7m.

On comparing similar companies from the Australian Diversified Financial industry with market caps ranging from AU$1.5b to AU$4.8b, we found that the median CEO total compensation was AU$3.0m. This suggests that Alexis George is paid more than the median for the industry. What's more, Alexis George holds AU$2.2m worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	AU$1.7m	AU$1.7m	42%
Other	AU$2.3m	AU$2.3m	58%
Total Compensation	AU$4.0m	AU$4.0m	100%

Talking in terms of the industry, salary represented approximately 58% of total compensation out of all the companies we analyzed, while other remuneration made up 42% of the pie. AMP sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

AMP Limited's Growth

Over the last three years, AMP Limited has shrunk its earnings per share by 23% per year. In the last year, its revenue is up 27%.

The decrease in EPS could be a concern for some investors. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has AMP Limited Been A Good Investment?

With a three year total loss of 5.2% for the shareholders, AMP Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for AMP (of which 2 don't sit too well with us!) that you should know about in order to have a holistic understanding of the 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.

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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.