This Is Why Australian Agricultural Company Limited's (ASX:AAC) CEO Compensation Looks Appropriate

CEO Hugh Killen has done a decent job of delivering relatively good performance at Australian Agricultural Company Limited (ASX:AAC) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 29 July 2021. We present our case of why we think CEO compensation looks fair.

View our latest analysis for Australian Agricultural

How Does Total Compensation For Hugh Killen Compare With Other Companies In The Industry?

At the time of writing, our data shows that Australian Agricultural Company Limited has a market capitalization of AU$841m, and reported total annual CEO compensation of AU$949k for the year to March 2021. Notably, that's an increase of 23% over the year before. Notably, the salary which is AU$647.8k, represents most of the total compensation being paid.

On examining similar-sized companies in the industry with market capitalizations between AU$545m and AU$2.2b, we discovered that the median CEO total compensation of that group was AU$966k. This suggests that Australian Agricultural remunerates its CEO largely in line with the industry average. Moreover, Hugh Killen also holds AU$395k worth of Australian Agricultural stock directly under their own name.

Component	2021	2020	Proportion (2021)
Salary	AU$648k	AU$643k	68%
Other	AU$301k	AU$131k	32%
Total Compensation	AU$949k	AU$774k	100%

Speaking on an industry level, nearly 81% of total compensation represents salary, while the remainder of 19% is other remuneration. Australian Agricultural pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Australian Agricultural Company Limited's Growth

Australian Agricultural Company Limited has seen its earnings per share (EPS) increase by 89% a year over the past three years. Its revenue is down 21% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. 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?

Australian Agricultural Company Limited has not done too badly by shareholders, with a total return of 5.7%, over three years. It would be nice to see that metric improve in the future. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which doesn't sit too well with us) in Australian Agricultural we think you should know about.

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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