Is Elders Limited’s (ASX:ELD) CEO Pay Fair?

Mark Allison became the CEO of Elders Limited (ASX:ELD) in 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Elders

How Does Mark Allison’s Compensation Compare With Similar Sized Companies?

According to our data, Elders Limited has a market capitalization of AU$831m, and paid its CEO total annual compensation worth AU$2.8m over the year to September 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$859k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from AU$289m to AU$1.2b, we found the median CEO total compensation was AU$1.1m.

Thus we can conclude that Mark Allison receives more in total compensation than the median of a group of companies in the same market, and of similar size to Elders Limited. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Elders has changed from year to year.

ASX:ELD CEO Compensation, November 4th 2019
ASX:ELD CEO Compensation, November 4th 2019

Is Elders Limited Growing?

Elders Limited has increased its earnings per share (EPS) by an average of 2.8% a year, over the last three years (using a line of best fit). Revenue was pretty flat on last year.

I’m not particularly impressed by the revenue growth, but it is good to see modest EPS growth. Considering these factors I’d say performance has been pretty decent, though not amazing. Shareholders might be interested in this free visualization of analyst forecasts.

Has Elders Limited Been A Good Investment?

Boasting a total shareholder return of 68% over three years, Elders Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

We compared total CEO remuneration at Elders Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

One might like to have seen stronger growth, but shareholder returns have been pleasing, over the last three years. So, considering these tasty returns, the CEO compensation may be quite appropriate. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Elders (free visualization of insider trades).

If you want to buy a stock that is better than Elders, this free list of high return, low debt companies is a great place to look.

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.