Stock Analysis

Argo Investments Limited's (ASX:ARG) CEO Compensation Looks Acceptable To Us And Here's Why

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Performance at Argo Investments Limited (ASX:ARG) has been rather uninspiring recently and shareholders may be wondering how CEO Jason Beddow plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 25 October 2021. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We think CEO compensation looks appropriate given the data we have put together.

See our latest analysis for Argo Investments

How Does Total Compensation For Jason Beddow Compare With Other Companies In The Industry?

Our data indicates that Argo Investments Limited has a market capitalization of AU$6.8b, and total annual CEO compensation was reported as AU$1.1m for the year to June 2021. We note that's a decrease of 8.8% compared to last year. We note that the salary portion, which stands at AU$724.2k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between AU$5.4b and AU$16b had a median total CEO compensation of AU$4.7m. That is to say, Jason Beddow is paid under the industry median. Moreover, Jason Beddow also holds AU$3.5m worth of Argo Investments stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary AU$724k AU$720k 68%
Other AU$341k AU$448k 32%
Total CompensationAU$1.1m AU$1.2m100%

Talking in terms of the industry, salary represented approximately 61% of total compensation out of all the companies we analyzed, while other remuneration made up 39% of the pie. Argo Investments is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ASX:ARG CEO Compensation October 18th 2021

A Look at Argo Investments Limited's Growth Numbers

Over the last three years, Argo Investments Limited has shrunk its earnings per share by 8.6% per year. It saw its revenue drop 7.8% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Argo Investments Limited Been A Good Investment?

Boasting a total shareholder return of 33% over three years, Argo Investments 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.

In Summary...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for Argo Investments (1 doesn't sit too well with us!) that you should be aware of before investing here.

Switching gears from Argo Investments, 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.

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

Find out whether Argo Investments 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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