Geoff Jones has been the CEO of GR Engineering Services Limited (ASX:GNG) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether GR Engineering Services pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for GR Engineering Services
Comparing GR Engineering Services Limited's CEO Compensation With the industry
At the time of writing, our data shows that GR Engineering Services Limited has a market capitalization of AU$199m, and reported total annual CEO compensation of AU$704k for the year to June 2020. That is, the compensation was roughly the same as last year. Notably, the salary which is AU$579.0k, represents most of the total compensation being paid.
On comparing similar companies from the same industry with market caps ranging from AU$131m to AU$523m, we found that the median CEO total compensation was AU$502k. Hence, we can conclude that Geoff Jones is remunerated higher than the industry median. What's more, Geoff Jones holds AU$988k worth of shares in the company in their own name.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$579k | AU$579k | 82% |
| Other | AU$125k | AU$134k | 18% |
| Total Compensation | AU$704k | AU$713k | 100% |
Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. GR Engineering Services is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
GR Engineering Services Limited's Growth
Over the last three years, GR Engineering Services Limited has shrunk its earnings per share by 88% per year. In the last year, its revenue is up 23%.
The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. 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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has GR Engineering Services Limited Been A Good Investment?
GR Engineering Services Limited has generated a total shareholder return of 10% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
In Summary...
As we touched on above, GR Engineering Services Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, revenues will undoubtedly inspire confidence since they've been growing at a healthy pace recently. Shareholder returns, while also growing, haven't impressed us that much during the same stretch. EPS growth, meanwhile, has been negative. While the CEO may not be underpaid, we don't think the pay is too generous either.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for GR Engineering Services that investors should look into moving forward.
Important note: GR Engineering Services is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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:GNG
GR Engineering Services
Provides engineering, procurement, and construction services to the mining and mineral processing industries in Australia and internationally.
Flawless balance sheet with solid track record.
