Stock Analysis

What We Learned About Argo Investments' (ASX:ARG) CEO Compensation

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Jason Beddow became the CEO of Argo Investments Limited (ASX:ARG) in 2010, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Argo Investments pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

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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$6.0b, and total annual CEO compensation was reported as AU$1.2m for the year to June 2020. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at AU$720.4k constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the industry with market capitalizations between AU$2.6b and AU$8.3b, we discovered that the median CEO total compensation of that group was AU$1.0m. From this we gather that Jason Beddow is paid around the median for CEOs in the industry. What's more, Jason Beddow holds AU$3.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary AU$720k AU$726k 62%
Other AU$448k AU$455k 38%
Total CompensationAU$1.2m AU$1.2m100%

On an industry level, around 69% of total compensation represents salary and 31% is other remuneration. Argo Investments pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ASX:ARG CEO Compensation January 4th 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 3.3% per year. It saw its revenue drop 31% over the last year.

The decline in EPS is a bit concerning. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Argo Investments Limited Been A Good Investment?

With a total shareholder return of 13% over three years, Argo Investments Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

As previously discussed, Jason is compensated close to the median for companies of its size, and which belong to the same industry. Argo Investments has had a poor showing when it comes to EPS growth, and it's tough to say that shareholder returns have done much to excite us. This doesn't compare well with CEO compensation, which is close to the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Argo Investments that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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