Does Coca-Cola Amatil Limited's (ASX:CCL) CEO Pay Matter?

Alison Watkins became the CEO of Coca-Cola Amatil Limited (ASX:CCL) in 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Coca-Cola Amatil

How Does Alison Watkins's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Coca-Cola Amatil Limited has a market cap of AU$6.2b, and is paying total annual CEO compensation of AU$5.1m. (This figure is for the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at AU$2.2m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$2.8b to AU$9.1b. The median total CEO compensation was AU$3.4m.

As you can see, Alison Watkins is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Coca-Cola Amatil Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at Coca-Cola Amatil, below.

Is Coca-Cola Amatil Limited Growing?

Over the last three years Coca-Cola Amatil Limited has grown its earnings per share (EPS) by an average of 9.0% per year (using a line of best fit). It achieved revenue growth of 1.1% over the last year.

I'd prefer higher revenue growth, but it is good to see modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Shareholders might be interested in this free visualization of analyst forecasts.

Has Coca-Cola Amatil Limited Been A Good Investment?

Coca-Cola Amatil Limited has generated a total shareholder return of 13% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

We examined the amount Coca-Cola Amatil Limited pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. Shareholders may want to check for free if Coca-Cola Amatil insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this freelist of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.