Stock Analysis

What Can We Learn About MotorCycle Holdings' (ASX:MTO) CEO Compensation?

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ASX:MTO
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Dave Ahmet became the CEO of MotorCycle Holdings Limited (ASX:MTO) in 2011, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for MotorCycle Holdings.

View our latest analysis for MotorCycle Holdings

How Does Total Compensation For Dave Ahmet Compare With Other Companies In The Industry?

According to our data, MotorCycle Holdings Limited has a market capitalization of AU$154m, and paid its CEO total annual compensation worth AU$797k over the year to June 2020. We note that's an increase of 13% above last year. In particular, the salary of AU$598.7k, 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 under AU$265m, the reported median total CEO compensation was AU$814k. This suggests that MotorCycle Holdings remunerates its CEO largely in line with the industry average. Furthermore, Dave Ahmet directly owns AU$28m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary AU$599k AU$637k 75%
Other AU$199k AU$72k 25%
Total CompensationAU$797k AU$709k100%

Talking in terms of the industry, salary represented approximately 61% of total compensation out of all the companies we analyzed, while other remuneration made up 39% of the pie. It's interesting to note that MotorCycle Holdings pays out a greater portion of remuneration through salary, compared to the 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.

ceo-compensation
ASX:MTO CEO Compensation December 23rd 2020

A Look at MotorCycle Holdings Limited's Growth Numbers

Over the last three years, MotorCycle Holdings Limited has shrunk its earnings per share by 55% per year. Its revenue is up 10% over the last year.

The decline in EPS is a bit concerning. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has MotorCycle Holdings Limited Been A Good Investment?

With a three year total loss of 47% for the shareholders, MotorCycle Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, MotorCycle Holdings Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, EPS growth and total shareholder return have been negative for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for MotorCycle Holdings (1 is a bit concerning!) that you should be aware of before investing here.

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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