Stock Analysis

It Looks Like Perenti Global Limited's (ASX:PRN) CEO May Expect Their Salary To Be Put Under The Microscope

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The results at Perenti Global Limited (ASX:PRN) have been quite disappointing recently and CEO Mark Alexander Norwell bears some responsibility for this. At the upcoming AGM on 08 October 2021, shareholders can hear from the board including their plans for turning around performance. 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.

View our latest analysis for Perenti Global

Comparing Perenti Global Limited's CEO Compensation With the industry

At the time of writing, our data shows that Perenti Global Limited has a market capitalization of AU$578m, and reported total annual CEO compensation of AU$2.0m for the year to June 2021. Notably, that's an increase of 10% over the year before. In particular, the salary of AU$1.04m, makes up a fairly large portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between AU$276m and AU$1.1b had a median total CEO compensation of AU$965k. Accordingly, our analysis reveals that Perenti Global Limited pays Mark Alexander Norwell north of the industry median. Furthermore, Mark Alexander Norwell directly owns AU$378k worth of shares in the company.

Component20212020Proportion (2021)
Salary AU$1.0m AU$870k 53%
Other AU$937k AU$925k 47%
Total CompensationAU$2.0m AU$1.8m100%

On an industry level, roughly 67% of total compensation represents salary and 33% is other remuneration. In Perenti Global's 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.

ASX:PRN CEO Compensation October 1st 2021

Perenti Global Limited's Growth

Perenti Global Limited has reduced its earnings per share by 110% a year over the last three years. It achieved revenue growth of 2.1% over the last year.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Perenti Global Limited Been A Good Investment?

With a total shareholder return of -49% over three years, Perenti Global Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which is significant) in Perenti Global we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

Valuation is complex, but we're helping make it simple.

Find out whether Perenti is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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