What We Learned About Peppermint Innovation's (ASX:PIL) CEO Compensation

Chris Kain became the CEO of Peppermint Innovation Limited (ASX:PIL) in 2015, 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 assess whether Peppermint Innovation pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Peppermint Innovation

Comparing Peppermint Innovation Limited's CEO Compensation With the industry

At the time of writing, our data shows that Peppermint Innovation Limited has a market capitalization of AU$44m, and reported total annual CEO compensation of AU$304k for the year to June 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of AU$265.0k, 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$259m, the reported median total CEO compensation was AU$354k. This suggests that Peppermint Innovation remunerates its CEO largely in line with the industry average. Furthermore, Chris Kain directly owns AU$98k worth of shares in the company.

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. It's interesting to note that Peppermint Innovation pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Peppermint Innovation Limited's Growth

Over the past three years, Peppermint Innovation Limited has seen its earnings per share (EPS) grow by 3.5% per year. Its revenue is up 75% over the last year.

We like the look of the strong year-on-year improvement in revenue. Combined with modest EPS growth, we get a good impression of the company. So while we'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Peppermint Innovation Limited Been A Good Investment?

We think that the total shareholder return of 90%, over three years, would leave most Peppermint Innovation Limited shareholders smiling. 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.

To Conclude...

As we touched on above, Peppermint Innovation 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. But the company has been found wanting in terms of EPS growth over the past three years. Meanwhile, shareholder returns have remained positive over the same time frame. So while shareholders shouldn't be overly concerned about CEO compensation, we suspect most would prefer to see improved performance, before a bump in pay.

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 5 warning signs for Peppermint Innovation (2 shouldn't be ignored!) 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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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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