Hugh Killen has been the CEO of Australian Agricultural Company Limited (ASX:AAC) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Hugh Killen Compare With Other Companies In The Industry?
According to our data, Australian Agricultural Company Limited has a market capitalization of AU$669m, and paid its CEO total annual compensation worth AU$774k over the year to March 2020. That's a slight decrease of 4.6% on the prior year. In particular, the salary of AU$643.5k, makes up a huge portion of the total compensation being paid to the CEO.
On examining similar-sized companies in the industry with market capitalizations between AU$281m and AU$1.1b, we discovered that the median CEO total compensation of that group was AU$850k. From this we gather that Hugh Killen is paid around the median for CEOs in the industry. Moreover, Hugh Killen also holds AU$306k worth of Australian Agricultural stock directly under their own name.
On an industry level, around 66% of total compensation represents salary and 34% is other remuneration. According to our research, Australian Agricultural has allocated a higher percentage of pay to salary in comparison to the wider 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.
A Look at Australian Agricultural Company Limited's Growth Numbers
Australian Agricultural Company Limited has reduced its earnings per share by 26% a year over the last three years. It saw its revenue drop 8.2% over the last year.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Australian Agricultural Company Limited Been A Good Investment?
With a three year total loss of 27% for the shareholders, Australian Agricultural Company Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, Australian Agricultural pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 2 which are a bit concerning) in Australian Agricultural we think you should know about.
Important note: Australian Agricultural is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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