Mteto Nyati became the CEO of Allied Electronics Corporation Limited (JSE:AEL) in 2017, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Allied Electronics
Comparing Allied Electronics Corporation Limited's CEO Compensation With the industry
At the time of writing, our data shows that Allied Electronics Corporation Limited has a market capitalization of R3.5b, and reported total annual CEO compensation of R15m for the year to February 2020. We note that's a decrease of 24% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at R7.0m.
On comparing similar companies from the same industry with market caps ranging from R1.5b to R6.0b, we found that the median CEO total compensation was R8.2m. This suggests that Mteto Nyati is paid more than the median for the industry.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | R7.0m | R6.1m | 48% |
| Other | R7.6m | R13m | 52% |
| Total Compensation | R15m | R19m | 100% |
Talking in terms of the industry, salary represented approximately 90% of total compensation out of all the companies we analyzed, while other remuneration made up 10% of the pie. Allied Electronics pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Allied Electronics Corporation Limited's Growth
Over the past three years, Allied Electronics Corporation Limited has seen its earnings per share (EPS) grow by 24% per year. It achieved revenue growth of 17% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Allied Electronics Corporation Limited Been A Good Investment?
Since shareholders would have lost about 12% over three years, some Allied Electronics Corporation Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
As we touched on above, Allied Electronics Corporation Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the company has impressed with its EPS growth, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Considering overall performance, we can't say Mteto is underpaid, in fact compensation is definitely on the higher side.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 3 warning signs for Allied Electronics 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 JSE:AEL
Altron
Provides information and communication technology solutions in South Africa, rest of Africa, Europe, and internationally.
Flawless balance sheet with solid track record.
