Increases to APA Group's (ASX:APA) CEO Compensation Might Cool off for now

Key Insights

• APA Group's Annual General Meeting to take place on 22nd of October
• CEO Adam Watson's total compensation includes salary of AU$1.61m
• The total compensation is 40% higher than the average for the industry
• Over the past three years, APA Group's EPS fell by 27% and over the past three years, the total shareholder return was 15%

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Despite APA Group's (ASX:APA) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. The upcoming AGM on 22nd of October may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for APA Group

How Does Total Compensation For Adam Watson Compare With Other Companies In The Industry?

At the time of writing, our data shows that APA Group has a market capitalization of AU$12b, and reported total annual CEO compensation of AU$4.0m for the year to June 2025. We note that's an increase of 17% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$1.6m.

In comparison with other companies in the Australia Gas Utilities industry with market capitalizations ranging from AU$6.2b to AU$19b, the reported median CEO total compensation was AU$2.9m. This suggests that Adam Watson is paid more than the median for the industry. Moreover, Adam Watson also holds AU$2.0m worth of APA Group stock directly under their own name.

On an industry level, roughly 36% of total compensation represents salary and 64% is other remuneration. It's interesting to note that APA Group pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at APA Group's Growth Numbers

Over the last three years, APA Group has shrunk its earnings per share by 27% per year. It achieved revenue growth of 4.6% over the last year.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has APA Group Been A Good Investment?

With a total shareholder return of 15% over three years, APA Group shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for APA Group (of which 2 are a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from APA 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.