This article will reflect on the compensation paid to Aaron Begley who has served as CEO of Matrix Composites & Engineering Ltd (ASX:MCE) since 2009. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Aaron Begley Compare With Other Companies In The Industry?
Our data indicates that Matrix Composites & Engineering Ltd has a market capitalization of AU$15m, and total annual CEO compensation was reported as AU$669k for the year to June 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at AU$434.8k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$279m, the reported median total CEO compensation was AU$718k. From this we gather that Aaron Begley is paid around the median for CEOs in the industry. Furthermore, Aaron Begley directly owns AU$995k worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. It's interesting to note that Matrix Composites & Engineering pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Matrix Composites & Engineering Ltd's Growth
Matrix Composites & Engineering Ltd has reduced its earnings per share by 33% a year over the last three years. In the last year, its revenue is down 28%.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Matrix Composites & Engineering Ltd Been A Good Investment?
Given the total shareholder loss of 70% over three years, many shareholders in Matrix Composites & Engineering Ltd are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As previously discussed, Aaron is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
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 4 warning signs for Matrix Composites & Engineering (1 is significant!) that you should be aware of before investing here.
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. 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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