Brendan Gore became the CEO of Peet Limited (ASX:PPC) in 2007, 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 Peet pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Peet
Comparing Peet Limited's CEO Compensation With the industry
At the time of writing, our data shows that Peet Limited has a market capitalization of AU$551m, and reported total annual CEO compensation of AU$1.4m for the year to June 2020. Notably, that's a decrease of 25% over the year before. Notably, the salary which is AU$885.1k, represents most of the total compensation being paid.
For comparison, other companies in the same industry with market capitalizations ranging between AU$263m and AU$1.1b had a median total CEO compensation of AU$780k. Accordingly, our analysis reveals that Peet Limited pays Brendan Gore north of the industry median. Moreover, Brendan Gore also holds AU$6.0m worth of Peet stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$885k | AU$917k | 62% |
| Other | AU$550k | AU$1.0m | 38% |
| Total Compensation | AU$1.4m | AU$1.9m | 100% |
On an industry level, around 84% of total compensation represents salary and 16% is other remuneration. Peet pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Peet Limited's Growth
Peet Limited has reduced its earnings per share by 42% a year over the last three years. Its revenue is down 25% over the previous year.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Peet Limited Been A Good Investment?
Given the total shareholder loss of 10% over three years, many shareholders in Peet Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude...
As previously discussed, Brendan is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Arguably worse, we've been waiting for positive EPS growth for the last three years. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.
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 Peet that investors should think about before committing capital to this 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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About ASX:PPC
Second-rate dividend payer low.
