A Quick Analysis On AVJennings' (ASX:AVJ) CEO Compensation

Peter Summers has been the CEO of AVJennings Limited (ASX:AVJ) since 2009, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for AVJennings.

Check out our latest analysis for AVJennings

How Does Total Compensation For Peter Summers Compare With Other Companies In The Industry?

According to our data, AVJennings Limited has a market capitalization of AU$223m, and paid its CEO total annual compensation worth AU$957k over the year to June 2020. That's a slight decrease of 7.7% on the prior year. In particular, the salary of AU$565.3k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from AU$135m to AU$538m, we found that the median CEO total compensation was AU$926k. From this we gather that Peter Summers is paid around the median for CEOs in the industry. What's more, Peter Summers holds AU$2.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 79% of total compensation represents salary and 21% is other remuneration. In AVJennings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

AVJennings Limited's Growth

Over the last three years, AVJennings Limited has shrunk its earnings per share by 38% per year. Its revenue is down 12% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has AVJennings Limited Been A Good Investment?

With a three year total loss of 14% for the shareholders, AVJennings Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we noted earlier, AVJennings pays its CEO in line with similar-sized companies belonging to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for AVJennings (of which 1 doesn't sit too well with us!) 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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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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