How Does Matrix Composites & Engineering's (ASX:MCE) CEO Pay Compare With Company Performance?

Aaron Begley has been the CEO of Matrix Composites & Engineering Ltd (ASX:MCE) since 2009, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Matrix Composites & Engineering.

View our latest analysis for Matrix Composites & Engineering

Comparing Matrix Composites & Engineering Ltd's CEO Compensation With the industry

According to our data, Matrix Composites & Engineering Ltd has a market capitalization of AU$15m, and paid its CEO total annual compensation worth AU$669k over the year to June 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is AU$434.8k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under AU$259m, the reported median total CEO compensation was AU$648k. So it looks like Matrix Composites & Engineering compensates Aaron Begley in line with the median for the industry. Moreover, Aaron Begley also holds AU$1.6m worth of Matrix Composites & Engineering stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 66% of total compensation represents salary, while the remainder of 34% is other remuneration. Although there is a difference in how total compensation is set, Matrix Composites & Engineering more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Matrix Composites & Engineering Ltd's Growth Numbers

Matrix Composites & Engineering Ltd has reduced its earnings per share by 33% a year over the last three years. It saw its revenue drop 28% 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Matrix Composites & Engineering Ltd Been A Good Investment?

Since shareholders would have lost about 75% over three years, some Matrix Composites & Engineering Ltd investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, Matrix Composites & Engineering Ltd is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Matrix Composites & Engineering (1 is concerning!) that you should be aware of before investing here.

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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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