How Should Investors React To Schrole Group's (ASX:SCL) CEO Pay?

By
Simply Wall St
Published
March 01, 2021
ASX:SCL
Source: Shutterstock

Rob Graham became the CEO of Schrole Group Ltd (ASX:SCL) 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 Schrole Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Schrole Group

How Does Total Compensation For Rob Graham Compare With Other Companies In The Industry?

Our data indicates that Schrole Group Ltd has a market capitalization of AU$22m, and total annual CEO compensation was reported as AU$380k for the year to December 2020. We note that's an increase of 27% above last year. In particular, the salary of AU$265.4k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below AU$259m, reported a median total CEO compensation of AU$354k. So it looks like Schrole Group compensates Rob Graham in line with the median for the industry. What's more, Rob Graham holds AU$3.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary AU$265k AU$267k 70%
Other AU$115k AU$32k 30%
Total CompensationAU$380k AU$299k100%

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. Schrole Group pays out 70% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ASX:SCL CEO Compensation March 2nd 2021

A Look at Schrole Group Ltd's Growth Numbers

Schrole Group Ltd's earnings per share (EPS) grew 91% per year over the last three years. It achieved revenue growth of 8.1% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Schrole Group Ltd Been A Good Investment?

Since shareholders would have lost about 32% over three years, some Schrole Group Ltd investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As previously discussed, Rob is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, the company has logged negative shareholder returns over the previous three years. But EPS growth is moving in a favorable direction, certainly a positive sign. Overall, we wouldn't say Rob is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 1 which is potentially serious) in Schrole Group we think you should know about.

Switching gears from Schrole Group, 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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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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