Why Agrimin's (ASX:AMN) CEO Pay Matters

By
Simply Wall St
Published
December 27, 2020
ASX:AMN
Source: Shutterstock

This article will reflect on the compensation paid to Mark Savich who has served as CEO of Agrimin Limited (ASX:AMN) since 2015. This analysis will also assess whether Agrimin pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Agrimin

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

At the time of writing, our data shows that Agrimin Limited has a market capitalization of AU$91m, and reported total annual CEO compensation of AU$344k for the year to June 2020. Notably, that's an increase of 48% over the year before. Notably, the salary which is AU$300.3k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below AU$263m, we found that the median total CEO compensation was AU$309k. From this we gather that Mark Savich is paid around the median for CEOs in the industry. Moreover, Mark Savich also holds AU$4.4m worth of Agrimin stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary AU$300k AU$150k 87%
Other AU$44k AU$82k 13%
Total CompensationAU$344k AU$232k100%

Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. Agrimin is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
ASX:AMN CEO Compensation December 27th 2020

Agrimin Limited's Growth

Over the last three years, Agrimin Limited has shrunk its earnings per share by 20% per year. It achieved revenue growth of 2,809% over the last year.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Agrimin Limited Been A Good Investment?

Given the total shareholder loss of 53% over three years, many shareholders in Agrimin Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As previously discussed, Mark is compensated close to the median for companies of its size, and which belong to the same industry. However, revenues have increased over the past year, a positive sign for the company. On the other hand, shareholder returns for Mark are negative over the same period. EPS growth is also negative, adding insult to injury. We'd say CEO compensation isn't unfair, but shareholders may be wary of a bump in pay before the company substantially improves overall performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 7 warning signs for Agrimin (3 make us uncomfortable!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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