This article will reflect on the compensation paid to Andrew Skelton who has served as CEO of A2B Australia Limited (ASX:A2B) since 2014. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for A2B Australia.
Check out our latest analysis for A2B Australia
How Does Total Compensation For Andrew Skelton Compare With Other Companies In The Industry?
Our data indicates that A2B Australia Limited has a market capitalization of AU$165m, and total annual CEO compensation was reported as AU$1.3m for the year to June 2020. That's a slight decrease of 6.4% on the prior year. In particular, the salary of AU$804.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$271m, we found that the median total CEO compensation was AU$256k. Hence, we can conclude that Andrew Skelton is remunerated higher than the industry median.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$804k | AU$779k | 63% |
| Other | AU$465k | AU$576k | 37% |
| Total Compensation | AU$1.3m | AU$1.4m | 100% |
Talking in terms of the industry, salary represented approximately 62% of total compensation out of all the companies we analyzed, while other remuneration made up 38% of the pie. Our data reveals that A2B Australia allocates salary more or less in line with the wider market. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at A2B Australia Limited's Growth Numbers
A2B Australia Limited has reduced its earnings per share by 59% a year over the last three years. It saw its revenue drop 14% over the last year.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 A2B Australia Limited Been A Good Investment?
Since shareholders would have lost about 9.2% over three years, some A2B Australia Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
As we noted earlier, A2B Australia pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. What's equally worrying is that the company isn't growing by our analysis. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for A2B Australia (1 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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About ASX:A2B
A2B Australia
A2B Australia Limited, together with its subsidiaries, provides technologies, bookings, dispatch, payment, and taxi related services in Australia.
Adequate balance sheet with acceptable track record.
