Stock Analysis

How Should Investors React To Mastermyne Group's (ASX:MYE) CEO Pay?

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Tony Caruso became the CEO of Mastermyne Group Limited (ASX:MYE) in 2005, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Mastermyne Group

How Does Total Compensation For Tony Caruso Compare With Other Companies In The Industry?

At the time of writing, our data shows that Mastermyne Group Limited has a market capitalization of AU$76m, and reported total annual CEO compensation of AU$721k for the year to June 2020. Notably, that's an increase of 9.0% over the year before. We note that the salary portion, which stands at AU$376.1k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under AU$261m, the reported median total CEO compensation was AU$305k. Hence, we can conclude that Tony Caruso is remunerated higher than the industry median. What's more, Tony Caruso holds AU$1.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary AU$376k AU$353k 52%
Other AU$345k AU$308k 48%
Total CompensationAU$721k AU$661k100%

On an industry level, roughly 69% of total compensation represents salary and 31% is other remuneration. In Mastermyne Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ASX:MYE CEO Compensation January 30th 2021

A Look at Mastermyne Group Limited's Growth Numbers

Over the past three years, Mastermyne Group Limited has seen its earnings per share (EPS) grow by 77% per year. It achieved revenue growth of 30% 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Mastermyne Group Limited Been A Good Investment?

Given the total shareholder loss of 7.7% over three years, many shareholders in Mastermyne Group Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we noted earlier, Mastermyne Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed with its EPS growth, but shareholder returns — over the same period — have been disappointing. Considering overall performance, we can't say Tony is underpaid, in fact compensation is definitely on the higher side.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 3 warning signs for Mastermyne Group that investors should be aware of in a dynamic business environment.

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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