We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Mitchell Services Limited's (ASX:MSV) CEO For Now

The share price of Mitchell Services Limited (ASX:MSV) has struggled to grow by much over the last few years and probably has to do with the fact that earnings growth has gone backwards. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 21 October 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Mitchell Services

How Does Total Compensation For Andrew Elf Compare With Other Companies In The Industry?

According to our data, Mitchell Services Limited has a market capitalization of AU$102m, and paid its CEO total annual compensation worth AU$814k over the year to June 2021. Notably, that's an increase of 15% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$400k.

For comparison, other companies in the industry with market capitalizations below AU$272m, reported a median total CEO compensation of AU$360k. Hence, we can conclude that Andrew Elf is remunerated higher than the industry median. Moreover, Andrew Elf also holds AU$236k worth of Mitchell Services stock directly under their own name.

Component	2021	2020	Proportion (2021)
Salary	AU$400k	AU$400k	49%
Other	AU$414k	AU$306k	51%
Total Compensation	AU$814k	AU$706k	100%

On an industry level, around 63% of total compensation represents salary and 37% is other remuneration. Mitchell Services pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Mitchell Services Limited's Growth Numbers

Over the last three years, Mitchell Services Limited has shrunk its earnings per share by 46% per year. Its revenue is up 9.1% over the last year.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Mitchell Services Limited Been A Good Investment?

With a total shareholder return of 2.3% over three years, Mitchell Services Limited has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

The flat share price growth combined with the the fact that earnings have failed to grow makes us wonder whether the share price will have any further strong momentum. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Mitchell Services that investors should be aware of in a dynamic business environment.

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.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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