Paul van Heerwaarden has been the CEO of Bega Cheese Limited (ASX:BGA) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for Bega Cheese
How Does Total Compensation For Paul van Heerwaarden Compare With Other Companies In The Industry?
At the time of writing, our data shows that Bega Cheese Limited has a market capitalization of AU$1.8b, and reported total annual CEO compensation of AU$857k for the year to June 2020. We note that's a decrease of 11% compared to last year. We note that the salary portion, which stands at AU$725.2k constitutes the majority of total compensation received by the CEO.
On examining similar-sized companies in the industry with market capitalizations between AU$1.3b and AU$4.1b, we discovered that the median CEO total compensation of that group was AU$1.2m. This suggests that Paul van Heerwaarden is paid below the industry median. Furthermore, Paul van Heerwaarden directly owns AU$281k worth of shares in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$725k | AU$707k | 85% |
| Other | AU$132k | AU$257k | 15% |
| Total Compensation | AU$857k | AU$964k | 100% |
On an industry level, around 80% of total compensation represents salary and 20% is other remuneration. Our data reveals that Bega Cheese allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Bega Cheese Limited's Growth Numbers
Bega Cheese Limited has reduced its earnings per share by 52% a year over the last three years. It achieved revenue growth of 5.1% over the last year.
Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Bega Cheese Limited Been A Good Investment?
Given the total shareholder loss of 12% over three years, many shareholders in Bega Cheese Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude...
As previously discussed, Paul is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. While we are quite underwhelmed with EPS growth, the shareholder returns over the past three years have also failed to impress us. We can't say the CEO compensation is high, but shareholders will be cold to a bump at this stage, considering negative investor returns.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Bega Cheese that you should be aware of before investing.
Switching gears from Bega Cheese, 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.
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About ASX:BGA
Bega Cheese
Bega Cheese Limited receives, processes, manufactures, and distributes dairy and other food-related products in Australia.
Excellent balance sheet with moderate growth potential.
