Andrew Elf has been the CEO of Mitchell Services Limited (ASX:MSV) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Mitchell Services pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Mitchell Services
Comparing Mitchell Services Limited's CEO Compensation With the industry
At the time of writing, our data shows that Mitchell Services Limited has a market capitalization of AU$112m, and reported total annual CEO compensation of AU$706k for the year to June 2020. That's a modest increase of 5.1% on the prior year. In particular, the salary of AU$400.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$264m, we found that the median total CEO compensation was AU$309k. Accordingly, our analysis reveals that Mitchell Services Limited pays Andrew Elf north of the industry median. Furthermore, Andrew Elf directly owns AU$440k worth of shares in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$400k | AU$400k | 57% |
| Other | AU$306k | AU$271k | 43% |
| Total Compensation | AU$706k | AU$671k | 100% |
Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. In Mitchell Services' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Mitchell Services Limited's Growth Numbers
Over the past three years, Mitchell Services Limited has seen its earnings per share (EPS) grow by 81% per year. Its revenue is up 46% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Mitchell Services Limited Been A Good Investment?
With a total shareholder return of 32% over three years, Mitchell Services Limited shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
To Conclude...
As we noted earlier, Mitchell Services pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, we must not forget that the EPS growth has been very strong over three years. Looking at the same time period, we think that the shareholder returns are respectable. So, considering the EPS growth we do not wish to criticize CEO compensation, though we'd recommend further research on management.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for Mitchell Services that investors should think about before committing capital to this stock.
Switching gears from Mitchell Services, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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:MSV
Mitchell Services
Provides exploration, and mine site and geotechnical drilling services to the exploration, mining, and energy industries in Australia.
Flawless balance sheet and good value.
