What Can We Make Of Patrys' (ASX:PAB) CEO Compensation?

This article will reflect on the compensation paid to James Campbell who has served as CEO of Patrys Limited (ASX:PAB) since 2015. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Patrys.

Check out our latest analysis for Patrys

How Does Total Compensation For James Campbell Compare With Other Companies In The Industry?

At the time of writing, our data shows that Patrys Limited has a market capitalization of AU$43m, and reported total annual CEO compensation of AU$434k for the year to June 2020. That's a notable decrease of 14% on last year. We note that the salary portion, which stands at AU$317.6k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under AU$257m, the reported median total CEO compensation was AU$406k. From this we gather that James Campbell is paid around the median for CEOs in the industry. Furthermore, James Campbell directly owns AU$194k worth of shares in the company.

On an industry level, roughly 65% of total compensation represents salary and 35% is other remuneration. Patrys 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.

Patrys Limited's Growth

Over the last three years, Patrys Limited has shrunk its earnings per share by 8.6% per year. It saw its revenue drop 8.4% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Patrys Limited Been A Good Investment?

Patrys Limited has generated a total shareholder return of 14% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

As we noted earlier, Patrys pays its CEO in line with similar-sized companies belonging to the same industry. According to our analysis, Patrys is suffering from uninspiring EPS growth, and even though shareholder returns are stable, they are hardly impressive. This doesn't compare well with CEO compensation, which is close to the industry median. We wouldn't go as far as saying CEO compensation is inappropriate, but we don't think the executive is underpaid.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 4 warning signs for Patrys (of which 2 are concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Patrys is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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