Andrew Skelton became the CEO of A2B Australia Limited (ASX:A2B) in 2014. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Andrew Skelton's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that A2B Australia Limited has a market cap of AU$176m, and reported total annual CEO compensation of AU$1.4m for the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$779k. We took a group of companies with market capitalizations below AU$293m, and calculated the median CEO total compensation to be AU$381k.
It would therefore appear that A2B Australia Limited pays Andrew Skelton more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at A2B Australia, below.
Is A2B Australia Limited Growing?
A2B Australia Limited has increased its earnings per share (EPS) by an average of 9.8% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 6.7%.
I'd prefer higher revenue growth, but I'm happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. Shareholders might be interested in this free visualization of analyst forecasts.
Has A2B Australia Limited Been A Good Investment?
With a three year total loss of 43%, A2B Australia Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount A2B Australia Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Considering this, we have the opinion that the CEO pay is more on the generous side, than the modest side. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at A2B Australia.
If you want to buy a stock that is better than A2B Australia, this free list of high return, low debt companies is a great place to look.
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