John Schaffer became the CEO of Schaffer Corporation Limited (ASX:SFC) in 1987, 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 Schaffer pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for Schaffer
How Does Total Compensation For John Schaffer Compare With Other Companies In The Industry?
At the time of writing, our data shows that Schaffer Corporation Limited has a market capitalization of AU$205m, and reported total annual CEO compensation of AU$1.4m for the year to June 2020. That is, the compensation was roughly the same as last year. In particular, the salary of AU$847.1k, 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$280m, we found that the median total CEO compensation was AU$237k. Hence, we can conclude that John Schaffer is remunerated higher than the industry median. What's more, John Schaffer holds AU$27m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$847k | AU$872k | 61% |
Other | AU$545k | AU$522k | 39% |
Total Compensation | AU$1.4m | AU$1.4m | 100% |
On an industry level, around 79% of total compensation represents salary and 21% is other remuneration. In Schaffer's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. 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.
Schaffer Corporation Limited's Growth
Schaffer Corporation Limited's earnings per share (EPS) grew 50% per year over the last three years. Its revenue is down 24% over the previous year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Schaffer Corporation Limited Been A Good Investment?
Most shareholders would probably be pleased with Schaffer Corporation Limited for providing a total return of 90% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
To Conclude...
As we noted earlier, Schaffer pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, Schaffer has produced strong EPS growth and shareholder returns over the last three years. So, in acknowledgment of the overall excellent performance, we believe CEO compensation is appropriate. The pleasing shareholder returns are the cherry on top. We wouldn't be wrong in saying that shareholders feel that John's performance creates value for the company.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Schaffer that investors should be aware of in a dynamic business environment.
Switching gears from Schaffer, 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.
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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