Here's Why It's Unlikely That Elders Limited's (ASX:ELD) CEO Will See A Pay Rise This Year

Key Insights

• Elders will host its Annual General Meeting on 13th of December
• CEO Mark Allison's total compensation includes salary of AU$1.24m
• The overall pay is 52% above the industry average
• Over the past three years, Elders' EPS fell by 6.9% and over the past three years, the total loss to shareholders 16%

Elders Limited (ASX:ELD) has not performed well recently and CEO Mark Allison will probably need to up their game. At the upcoming AGM on 13th of December, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Elders

How Does Total Compensation For Mark Allison Compare With Other Companies In The Industry?

According to our data, Elders Limited has a market capitalization of AU$1.2b, and paid its CEO total annual compensation worth AU$2.3m over the year to September 2023. That's mostly flat as compared to the prior year's compensation. In particular, the salary of AU$1.24m, makes up a fairly large portion of the total compensation being paid to the CEO.

For comparison, other companies in the Australian Food industry with market capitalizations ranging between AU$609m and AU$2.4b had a median total CEO compensation of AU$1.5m. Accordingly, our analysis reveals that Elders Limited pays Mark Allison north of the industry median. Moreover, Mark Allison also holds AU$9.1m worth of Elders stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	AU$1.2m	AU$1.1m	54%
Other	AU$1.1m	AU$1.2m	46%
Total Compensation	AU$2.3m	AU$2.3m	100%

Speaking on an industry level, nearly 67% of total compensation represents salary, while the remainder of 33% is other remuneration. Elders sets aside a smaller share of compensation for salary, in comparison to the overall industry. 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 Elders Limited's Growth Numbers

Over the last three years, Elders Limited has shrunk its earnings per share by 6.9% per year. Its revenue is down 3.6% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Elders Limited Been A Good Investment?

Since shareholders would have lost about 16% over three years, some Elders Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Elders that investors should think about before committing capital to this stock.

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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.