Shareholders will probably not be too impressed with the underwhelming results at Magontec Limited (ASX:MGL) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 25 May 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.
How Does Total Compensation For Nick Andrews Compare With Other Companies In The Industry?
At the time of writing, our data shows that Magontec Limited has a market capitalization of AU$23m, and reported total annual CEO compensation of AU$412k for the year to December 2020. Notably, that's a decrease of 15% over the year before. We note that the salary portion, which stands at AU$387.5k constitutes the majority of total compensation received by the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$258m, we found that the median total CEO compensation was AU$305k. This suggests that Nick Andrews is paid more than the median for the industry. What's more, Nick Andrews holds AU$448k worth of shares in the company in their own name.
Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. Magontec is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Magontec Limited's Growth
Over the last three years, Magontec Limited has shrunk its earnings per share by 14% per year. It saw its revenue drop 27% over the last year.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Magontec Limited Been A Good Investment?
Given the total shareholder loss of 29% over three years, many shareholders in Magontec Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Magontec (1 is a bit concerning!) that you should be aware of before investing here.
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Magontec Limited, together with its subsidiaries, engages in the research, development, manufacture, and sale of generic and specialist alloys in Asia, the Americas, Europe, and internationally.
Flawless balance sheet with outstanding track record.