How Is Vita Group's (ASX:VTG) CEO Compensated?

Maxine Horne has been the CEO of Vita Group Limited (ASX:VTG) since 2013, 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 Vita Group.

Check out our latest analysis for Vita Group

Comparing Vita Group Limited's CEO Compensation With the industry

Our data indicates that Vita Group Limited has a market capitalization of AU$178m, and total annual CEO compensation was reported as AU$1.5m for the year to June 2020. That's a fairly small increase of 6.8% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$491k.

For comparison, other companies in the industry with market capitalizations below AU$260m, reported a median total CEO compensation of AU$800k. Accordingly, our analysis reveals that Vita Group Limited pays Maxine Horne north of the industry median. Furthermore, Maxine Horne directly owns AU$3.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. Vita Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Vita Group Limited's Growth

Over the last three years, Vita Group Limited has shrunk its earnings per share by 19% per year. In the last year, its revenue is up 2.5%.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Vita Group Limited Been A Good Investment?

Since shareholders would have lost about 21% over three years, some Vita Group Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Maxine is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Vita Group that investors should look into moving forward.

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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