Stuart Irving became the CEO of Computershare Limited (ASX:CPU) in 2014, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Computershare.
See our latest analysis for Computershare
Comparing Computershare Limited's CEO Compensation With the industry
At the time of writing, our data shows that Computershare Limited has a market capitalization of AU$7.0b, and reported total annual CEO compensation of US$4.0m for the year to June 2020. That's a notable decrease of 27% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.3m.
On comparing similar companies from the same industry with market caps ranging from AU$5.5b to AU$17b, we found that the median CEO total compensation was US$4.1m. So it looks like Computershare compensates Stuart Irving in line with the median for the industry. Moreover, Stuart Irving also holds AU$3.2m worth of Computershare stock directly under their own name.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$1.3m | US$1.2m | 32% |
Other | US$2.7m | US$4.3m | 68% |
Total Compensation | US$4.0m | US$5.5m | 100% |
Speaking on an industry level, nearly 66% of total compensation represents salary, while the remainder of 34% is other remuneration. Computershare sets aside a smaller share of compensation for salary, in comparison to the overall 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 Computershare Limited's Growth Numbers
Over the last three years, Computershare Limited has shrunk its earnings per share by 4.1% per year. In the last year, its revenue is down 3.2%.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Computershare Limited Been A Good Investment?
Since shareholders would have lost about 8.0% over three years, some Computershare Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary...
As we noted earlier, Computershare pays its CEO in line with similar-sized companies belonging to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Computershare that investors should think about before committing capital to this stock.
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.
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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