Martin Alistair Earp has been the CEO of InvoCare Limited (ASX:IVC) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for InvoCare.
How Does Total Compensation For Martin Alistair Earp Compare With Other Companies In The Industry?
According to our data, InvoCare Limited has a market capitalization of AU$1.3b, and paid its CEO total annual compensation worth AU$1.0m over the year to December 2019. We note that's a decrease of 8.2% compared to last year. In particular, the salary of AU$842.7k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the same industry with market capitalizations ranging between AU$555m and AU$2.2b had a median total CEO compensation of AU$1.4m. This suggests that Martin Alistair Earp is paid below the industry median. Furthermore, Martin Alistair Earp directly owns AU$169k worth of shares in the company.
On an industry level, around 81% of total compensation represents salary and 19% is other remuneration. There isn't a significant difference between InvoCare and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
InvoCare Limited's Growth
Over the last three years, InvoCare Limited has shrunk its earnings per share by 63% per year. In the last year, its revenue is down 2.3%.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has InvoCare Limited Been A Good Investment?
Since shareholders would have lost about 34% over three years, some InvoCare Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As previously discussed, Martin Alistair is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. EPS growth has failed to impress us, and the same can be said about shareholder returns. We can't say the CEO compensation is high, but shareholders will be cold to a bump at this stage, considering negative investor returns.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 5 warning signs for InvoCare that investors should be aware of in a dynamic business environment.
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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