Robert Kelly became the CEO of Steadfast Group Limited (ASX:SDF) in 1996, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Steadfast Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Steadfast Group
Comparing Steadfast Group Limited's CEO Compensation With the industry
Our data indicates that Steadfast Group Limited has a market capitalization of AU$3.5b, and total annual CEO compensation was reported as AU$4.0m for the year to June 2020. Notably, that's an increase of 11% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$1.1m.
In comparison with other companies in the industry with market capitalizations ranging from AU$2.6b to AU$8.3b, the reported median CEO total compensation was AU$3.9m. So it looks like Steadfast Group compensates Robert Kelly in line with the median for the industry. Moreover, Robert Kelly also holds AU$14m worth of Steadfast Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$1.1m | AU$982k | 29% |
| Other | AU$2.8m | AU$2.6m | 71% |
| Total Compensation | AU$4.0m | AU$3.6m | 100% |
Speaking on an industry level, nearly 35% of total compensation represents salary, while the remainder of 65% is other remuneration. Steadfast Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Steadfast Group Limited's Growth
Steadfast Group Limited has reduced its earnings per share by 51% a year over the last three years. In the last year, its revenue is up 18%.
The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Steadfast Group Limited Been A Good Investment?
Most shareholders would probably be pleased with Steadfast Group Limited for providing a total return of 52% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
As we noted earlier, Steadfast Group pays its CEO in line with similar-sized companies belonging to the same industry. Investors will be happy that Steadfast Group has produced strong shareholder returns for the past three years. Meanwhile, revenues have been increasing recently However, on a concerning note, EPS is not growing. Overall, the company's performance hasn't been that disappointing for us to object the CEO compensation.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Steadfast Group (1 can't be ignored!) that you should be aware of before investing here.
Switching gears from Steadfast Group, 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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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. 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.
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About ASX:SDF
Steadfast Group
Provides general insurance brokerage services Australasia, Asia, and Europe.
Excellent balance sheet average dividend payer.
