A Look At Altium's (ASX:ALU) CEO Remuneration

Aram Mirkazemi has been the CEO of Altium Limited (ASX:ALU) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Altium

How Does Total Compensation For Aram Mirkazemi Compare With Other Companies In The Industry?

At the time of writing, our data shows that Altium Limited has a market capitalization of AU$3.4b, and reported total annual CEO compensation of US$1.7m for the year to June 2020. Notably, that's a decrease of 45% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$500k.

For comparison, other companies in the same industry with market capitalizations ranging between AU$2.6b and AU$8.3b had a median total CEO compensation of US$3.7m. That is to say, Aram Mirkazemi is paid under the industry median. Moreover, Aram Mirkazemi also holds AU$257m worth of Altium stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. It's interesting to note that Altium allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Altium Limited's Growth

Altium Limited has reduced its earnings per share by 5.1% a year over the last three years. In the last year, its revenue is up 5.2%.

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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Altium Limited Been A Good Investment?

Boasting a total shareholder return of 38% over three years, Altium 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...

As we touched on above, Altium Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. And although the company is suffering from declining EPS growth over the past three years, shareholder returns remain strong. So, while it would be nice to have better EPS growth, our analysis suggests CEO compensation is quite modest.

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 Altium that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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