Stock Analysis

A Quick Analysis On ASX's (ASX:ASX) CEO Salary

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This article will reflect on the compensation paid to Dominic Stevens who has served as CEO of ASX Limited (ASX:ASX) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

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How Does Total Compensation For Dominic Stevens Compare With Other Companies In The Industry?

At the time of writing, our data shows that ASX Limited has a market capitalization of AU$14b, and reported total annual CEO compensation of AU$4.1m for the year to June 2020. That's just a smallish increase of 4.0% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$2.0m.

In comparison with other companies in the industry with market capitalizations over AU$11b , the reported median total CEO compensation was AU$8.8m. Accordingly, ASX pays its CEO under the industry median. Moreover, Dominic Stevens also holds AU$5.1m worth of ASX stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary AU$2.0m AU$2.0m 48%
Other AU$2.1m AU$2.0m 52%
Total CompensationAU$4.1m AU$3.9m100%

Talking in terms of the industry, salary represented approximately 69% of total compensation out of all the companies we analyzed, while other remuneration made up 31% of the pie. It's interesting to note that ASX allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ASX:ASX CEO Compensation December 30th 2020

A Look at ASX Limited's Growth Numbers

ASX Limited's earnings per share (EPS) grew 4.7% per year over the last three years. Revenue was pretty flat on last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has ASX Limited Been A Good Investment?

We think that the total shareholder return of 50%, over three years, would leave most ASX Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As we noted earlier, ASX pays its CEO lower than the norm for similar-sized companies belonging to the same industry. However, shareholder returns are rock solid over the past three years, and that’s undoubtedly a good sign. As a result of the juicy return to investors, CEO compensation may well be quite reasonable.

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 1 warning sign for ASX 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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