Here's What We Learned About The CEO Pay At The Agency Group Australia Limited (ASX:AU1)

Simply Wall St
January 05, 2021
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Paul Niardone became the CEO of The Agency Group Australia Limited (ASX:AU1) in 2016, 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 assess whether Agency Group Australia pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Agency Group Australia

Comparing The Agency Group Australia Limited's CEO Compensation With the industry

According to our data, The Agency Group Australia Limited has a market capitalization of AU$15m, and paid its CEO total annual compensation worth AU$361k over the year to June 2020. That's a notable decrease of 23% on last year. Notably, the salary which is AU$315.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below AU$260m, reported a median total CEO compensation of AU$490k. From this we gather that Paul Niardone is paid around the median for CEOs in the industry.

Component20202019Proportion (2020)
Salary AU$315k AU$300k 87%
Other AU$46k AU$166k 13%
Total CompensationAU$361k AU$466k100%

Speaking on an industry level, nearly 81% of total compensation represents salary, while the remainder of 19% is other remuneration. Although there is a difference in how total compensation is set, Agency Group Australia more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ASX:AU1 CEO Compensation January 5th 2021

A Look at The Agency Group Australia Limited's Growth Numbers

The Agency Group Australia Limited's earnings per share (EPS) grew 37% per year over the last three years. It achieved revenue growth of 50% 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has The Agency Group Australia Limited Been A Good Investment?

With a three year total loss of 86% for the shareholders, The Agency Group Australia Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, The Agency Group Australia Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, the company has logged negative shareholder returns over the previous three years. But EPS growth is moving in a favorable direction, certainly a positive sign. Considering positive EPS growth, we'd say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.

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 3 warning signs for Agency Group Australia (of which 1 is potentially serious!) that you should know about in order to have a holistic understanding of the stock.

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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