Hugh Killen has been the CEO of Australian Agricultural Company Limited (ASX:AAC) since 2018, 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 Australian Agricultural.
Check out our latest analysis for Australian Agricultural
How Does Total Compensation For Hugh Killen Compare With Other Companies In The Industry?
Our data indicates that Australian Agricultural Company Limited has a market capitalization of AU$660m, and total annual CEO compensation was reported as AU$774k for the year to March 2020. That's a slight decrease of 4.6% on the prior year. Notably, the salary which is AU$643.5k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations ranging from AU$279m to AU$1.1b, the reported median CEO total compensation was AU$1.1m. From this we gather that Hugh Killen is paid around the median for CEOs in the industry. What's more, Hugh Killen holds AU$317k worth of shares in the company in their own name.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$643k | AU$649k | 83% |
| Other | AU$131k | AU$163k | 17% |
| Total Compensation | AU$774k | AU$811k | 100% |
Talking in terms of the industry, salary represented approximately 80% of total compensation out of all the companies we analyzed, while other remuneration made up 20% of the pie. Australian Agricultural is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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 Australian Agricultural Company Limited's Growth Numbers
Australian Agricultural Company Limited has reduced its earnings per share by 26% a year over the last three years. Its revenue is down 8.2% over the previous year.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Australian Agricultural Company Limited Been A Good Investment?
Given the total shareholder loss of 31% over three years, many shareholders in Australian Agricultural Company Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
As we noted earlier, Australian Agricultural pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for Australian Agricultural (of which 2 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.
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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