Stock Analysis

Here's Why Shareholders May Want To Be Cautious With Increasing Centuria Capital Group's (ASX:CNI) CEO Pay Packet

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ASX:CNI
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Key Insights

  • Centuria Capital Group to hold its Annual General Meeting on 17th of November
  • Total pay for CEO John McBain includes AU$1.55m salary
  • The overall pay is 153% above the industry average
  • Centuria Capital Group's three-year loss to shareholders was 40% while its EPS was down 5.2% over the past three years

The underwhelming share price performance of Centuria Capital Group (ASX:CNI) in the past three years would have disappointed many shareholders. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 17th of November will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

Check out our latest analysis for Centuria Capital Group

How Does Total Compensation For John McBain Compare With Other Companies In The Industry?

According to our data, Centuria Capital Group has a market capitalization of AU$990m, and paid its CEO total annual compensation worth AU$4.4m over the year to June 2023. We note that's a small decrease of 7.1% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$1.6m.

For comparison, other companies in the Australian REITs industry with market capitalizations ranging between AU$630m and AU$2.5b had a median total CEO compensation of AU$1.7m. This suggests that John McBain is paid more than the median for the industry. What's more, John McBain holds AU$9.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20232022Proportion (2023)
Salary AU$1.6m AU$1.6m 35%
Other AU$2.9m AU$3.2m 65%
Total CompensationAU$4.4m AU$4.8m100%

Talking in terms of the industry, salary represented approximately 39% of total compensation out of all the companies we analyzed, while other remuneration made up 61% of the pie. Centuria Capital Group pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ASX:CNI CEO Compensation November 10th 2023

Centuria Capital Group's Growth

Over the last three years, Centuria Capital Group has shrunk its earnings per share by 5.2% per year. Its revenue is up 23% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Centuria Capital Group Been A Good Investment?

With a total shareholder return of -40% over three years, Centuria Capital Group shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Centuria Capital 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.

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

Find out whether Centuria Capital Group 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.

View the Free Analysis

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.