National Tyre & Wheel Limited's (ASX:NTD) CEO Compensation Is Looking A Bit Stretched At The Moment

By
Simply Wall St
Published
October 27, 2021
ASX:NTD
Source: Shutterstock

CEO John Ludemann has done a decent job of delivering relatively good performance at National Tyre & Wheel Limited (ASX:NTD) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 03 November 2021. However, some shareholders will still be cautious of paying the CEO excessively.

See our latest analysis for National Tyre & Wheel

Comparing National Tyre & Wheel Limited's CEO Compensation With the industry

Our data indicates that National Tyre & Wheel Limited has a market capitalization of AU$126m, and total annual CEO compensation was reported as AU$798k for the year to June 2021. Notably, that's an increase of 17% over the year before. Notably, the salary which is AU$514.5k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below AU$266m, reported a median total CEO compensation of AU$306k. Accordingly, our analysis reveals that National Tyre & Wheel Limited pays John Ludemann north of the industry median. What's more, John Ludemann holds AU$3.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20212020Proportion (2021)
Salary AU$514k AU$507k 64%
Other AU$283k AU$172k 36%
Total CompensationAU$798k AU$679k100%

On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. National Tyre & Wheel is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ASX:NTD CEO Compensation October 27th 2021

A Look at National Tyre & Wheel Limited's Growth Numbers

National Tyre & Wheel Limited's earnings per share (EPS) grew 50% per year over the last three years. Its revenue is up 191% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has National Tyre & Wheel Limited Been A Good Investment?

Boasting a total shareholder return of 41% over three years, National Tyre & Wheel Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

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 3 warning signs for National Tyre & Wheel that investors should think about before committing capital to this stock.

Switching gears from National Tyre & Wheel, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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