Is MotorCycle Holdings Limited’s (ASX:MTO) CEO Pay Justified?

Dave Ahmet became the CEO of MotorCycle Holdings Limited (ASX:MTO) in 2011. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

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View our latest analysis for MotorCycle Holdings

How Does Dave Ahmet’s Compensation Compare With Similar Sized Companies?

Our data indicates that MotorCycle Holdings Limited is worth AU$83m, and total annual CEO compensation is AU$747k. (This is based on the year to June 2018). While we always look at total compensation first, we note that the salary component is less, at AU$627k. We took a group of companies with market capitalizations below AU$289m, and calculated the median CEO total compensation to be AU$355k.

It would therefore appear that MotorCycle Holdings Limited pays Dave Ahmet more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at MotorCycle Holdings has changed over time.

ASX:MTO CEO Compensation, May 27th 2019
ASX:MTO CEO Compensation, May 27th 2019

Is MotorCycle Holdings Limited Growing?

On average over the last three years, MotorCycle Holdings Limited has shrunk earnings per share by 1.3% each year (measured with a line of best fit). In the last year, its revenue is up 32%.

The reduction in earnings per share, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. These two metric are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching. Shareholders might be interested in this free visualization of analyst forecasts.

Has MotorCycle Holdings Limited Been A Good Investment?

With a three year total loss of 43%, MotorCycle Holdings Limited would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared total CEO remuneration at MotorCycle Holdings Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Considering this, we have the opinion that the CEO pay is more on the generous side, than the modest side. Shareholders may want to check for free if MotorCycle Holdings insiders are buying or selling shares.

If you want to buy a stock that is better than MotorCycle Holdings, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.