Increases to CEO Compensation Might Be Put On Hold For Now at Perpetual Limited (ASX:PPT)

CEO Rob Adams has done a decent job of delivering relatively good performance at Perpetual Limited (ASX:PPT) recently. As shareholders go into the upcoming AGM on 20 October 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

View our latest analysis for Perpetual

How Does Total Compensation For Rob Adams Compare With Other Companies In The Industry?

At the time of writing, our data shows that Perpetual Limited has a market capitalization of AU$2.0b, and reported total annual CEO compensation of AU$2.3m for the year to June 2021. Notably, that's an increase of 26% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$1.1m.

On comparing similar companies from the same industry with market caps ranging from AU$1.4b to AU$4.3b, we found that the median CEO total compensation was AU$1.5m. This suggests that Rob Adams is paid more than the median for the industry. Furthermore, Rob Adams directly owns AU$1.6m worth of shares in the company.

Component	2021	2020	Proportion (2021)
Salary	AU$1.1m	AU$1.3m	50%
Other	AU$1.2m	AU$549k	50%
Total Compensation	AU$2.3m	AU$1.8m	100%

Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. It's interesting to note that Perpetual 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.

Perpetual Limited's Growth

Over the last three years, Perpetual Limited has shrunk its earnings per share by 24% per year. Its revenue is up 33% over the last year.

The decrease in EPS could be a concern for some investors. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Perpetual Limited Been A Good Investment?

With a total shareholder return of 22% over three years, Perpetual Limited shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Although the company has performed relatively well, we still think there are some areas that could be improved. Until EPS growth picks back up, we think shareholders may find it hard to justify increasing CEO pay given that they are already paid above industry average.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Perpetual that investors should be aware of in a dynamic business environment.

Switching gears from Perpetual, 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.

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.

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