Ron Delia became the CEO of Amcor Limited (ASX:AMC) in 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Ron Delia’s Compensation Compare With Similar Sized Companies?
Our data indicates that Amcor Limited is worth AU$17b, and total annual CEO compensation is US$5.6m. (This figure is for the year to June 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.5m. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$4.0m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.
Thus we can conclude that Ron Delia receives more in total compensation than the median of a group of large companies in the same market as Amcor 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.
You can see, below, how CEO compensation at Amcor has changed over time.
Is Amcor Limited Growing?
Over the last three years Amcor Limited has grown its earnings per share (EPS) by an average of 23% per year (using a line of best fit). It achieved revenue growth of 2.5% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Shareholders might be interested in this free visualization of analyst forecasts.
Has Amcor Limited Been A Good Investment?
Amcor Limited has generated a total shareholder return of 17% over three years, so most shareholders would be reasonably content. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.
We compared total CEO remuneration at Amcor Limited with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. We also note that, over the same time frame, shareholder returns haven’t been bad. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we’d recommend further research on management. So you may want to check if insiders are buying Amcor shares with their own money (free access).
If you want to buy a stock that is better than Amcor, 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 firstname.lastname@example.org. 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.