Should You Worry About Engenco Limited's (ASX:EGN) CEO Pay Cheque?
Kevin Pallas became the CEO of Engenco Limited (ASX:EGN) in 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. 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.
View our latest analysis for Engenco
How Does Kevin Pallas's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Engenco Limited has a market cap of AU$174m, and reported total annual CEO compensation of AU$513k for the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$411k. We looked at a group of companies with market capitalizations under AU$305m, and the median CEO total compensation was AU$386k.
Thus we can conclude that Kevin Pallas receives more in total compensation than the median of a group of companies in the same market, and of similar size to Engenco Limited. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Engenco, below.
Is Engenco Limited Growing?
On average over the last three years, Engenco Limited has grown earnings per share (EPS) by 25% each year (using a line of best fit). It achieved revenue growth of 5.2% over the last year.
This demonstrates that the company has been improving recently. A good result. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Engenco Limited Been A Good Investment?
Boasting a total shareholder return of 248% over three years, Engenco Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
We compared the total CEO remuneration paid by Engenco Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Engenco shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
