Simon Owen has been the CEO of Ingenia Communities Group (ASX:INA) 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 Ingenia Communities Group.
Note: The company does not report funds from operations, and as a result, we have used earnings per share in our analysis.
Comparing Ingenia Communities Group's CEO Compensation With the industry
Our data indicates that Ingenia Communities Group has a market capitalization of AU$1.6b, and total annual CEO compensation was reported as AU$1.3m for the year to June 2020. That's a slight decrease of 6.7% on the prior year. In particular, the salary of AU$663.3k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations ranging from AU$1.3b to AU$4.1b, the reported median CEO total compensation was AU$1.5m. So it looks like Ingenia Communities Group compensates Simon Owen in line with the median for the industry. Furthermore, Simon Owen directly owns AU$7.3m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 57% of total compensation represents salary, while the remainder of 43% is other remuneration. It's interesting to note that Ingenia Communities Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Ingenia Communities Group's Growth
Over the last three years, Ingenia Communities Group has shrunk its earnings per share by 10% per year. In the last year, its revenue changed by just 0.8%.
Few shareholders would be pleased to read that EPS have declined. And the flat revenue hardly impresses. 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 Ingenia Communities Group Been A Good Investment?
Most shareholders would probably be pleased with Ingenia Communities Group for providing a total return of 103% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
As we noted earlier, Ingenia Communities Group pays its CEO in line with similar-sized companies belonging to the same industry. Some investors may take issue with this, especially considering shrinking EPS for the past three years. But on the bright side, shareholder returns have moved northward during the same period. We wouldn't say CEO compensation is too high, but shareholders will probably want to see an increase in EPS before agreeing the business should pay any more.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Ingenia Communities Group that you should be aware of before investing.
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.
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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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