Does Macmahon Holdings' (ASX:MAH) CEO Salary Compare Well With The Performance Of The Company?

By
Simply Wall St
Published
February 03, 2021
ASX:MAH
Source: Shutterstock

Mick Finnegan has been the CEO of Macmahon Holdings Limited (ASX:MAH) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Macmahon Holdings.

See our latest analysis for Macmahon Holdings

Comparing Macmahon Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that Macmahon Holdings Limited has a market capitalization of AU$545m, and reported total annual CEO compensation of AU$2.0m for the year to June 2020. Notably, that's an increase of 27% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$623k.

In comparison with other companies in the industry with market capitalizations ranging from AU$264m to AU$1.1b, the reported median CEO total compensation was AU$957k. Accordingly, our analysis reveals that Macmahon Holdings Limited pays Mick Finnegan north of the industry median. Moreover, Mick Finnegan also holds AU$1.3m worth of Macmahon Holdings stock directly under their own name.

Component20202019Proportion (2020)
Salary AU$623k AU$604k 30%
Other AU$1.4m AU$1.0m 70%
Total CompensationAU$2.0m AU$1.6m100%

On an industry level, roughly 69% of total compensation represents salary and 31% is other remuneration. In Macmahon Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ASX:MAH CEO Compensation February 4th 2021

Macmahon Holdings Limited's Growth

Macmahon Holdings Limited has seen its earnings per share (EPS) increase by 60% a year over the past three years. In the last year, its revenue is up 25%.

This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Macmahon Holdings Limited Been A Good Investment?

Macmahon Holdings Limited has generated a total shareholder return of 19% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

As previously discussed, Mick is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company has impressed us with its EPS growth, over three years. Looking at the same time period, we think that the shareholder returns are respectable. While it may be worth researching further, we don't see a problem with the high CEO pay, given the good EPS growth.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Macmahon Holdings that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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