Michael Lindsay became the CEO of Lindsay Australia Limited (ASX:LAU) in 2002, 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 Lindsay Australia pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Lindsay Australia
How Does Total Compensation For Michael Lindsay Compare With Other Companies In The Industry?
At the time of writing, our data shows that Lindsay Australia Limited has a market capitalization of AU$106m, and reported total annual CEO compensation of AU$1.2m for the year to June 2020. That's just a smallish increase of 5.3% on last year. Notably, the salary which is AU$843.4k, represents most of the total compensation being paid.
On comparing similar-sized companies in the industry with market capitalizations below AU$260m, we found that the median total CEO compensation was AU$200k. Hence, we can conclude that Michael Lindsay is remunerated higher than the industry median. Moreover, Michael Lindsay also holds AU$4.1m worth of Lindsay Australia stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$843k | AU$828k | 70% |
| Other | AU$366k | AU$320k | 30% |
| Total Compensation | AU$1.2m | AU$1.1m | 100% |
On an industry level, around 63% of total compensation represents salary and 37% is other remuneration. Lindsay Australia pays out 70% of remuneration in the form of a salary, significantly higher than the industry average. 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.
Lindsay Australia Limited's Growth
Over the last three years, Lindsay Australia Limited has shrunk its earnings per share by 6.9% per year. In the last year, its revenue is up 6.5%.
Few shareholders would be pleased to read that EPS have declined. 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 Lindsay Australia Limited Been A Good Investment?
Given the total shareholder loss of 7.3% over three years, many shareholders in Lindsay Australia Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary...
As previously discussed, Michael is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. What's equally worrying is that the company isn't growing by our analysis. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 4 warning signs for Lindsay Australia 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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About ASX:LAU
Lindsay Australia
Provides integrated transport, logistics, and rural supply services to the food processing, food services, fresh produce, and horticulture sectors in Australia.
Undervalued with excellent balance sheet and pays a dividend.
