How Should Investors React To Empired's (ASX:EPD) CEO Pay?

Russell Baskerville is the CEO of Empired Limited (ASX:EPD), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether Empired pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Empired

Comparing Empired Limited's CEO Compensation With the industry

According to our data, Empired Limited has a market capitalization of AU$95m, and paid its CEO total annual compensation worth AU$748k over the year to June 2020. That's a notable decrease of 13% on last year. Notably, the salary which is AU$570.2k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below AU$279m, we found that the median total CEO compensation was AU$409k. This suggests that Russell Baskerville is paid more than the median for the industry. What's more, Russell Baskerville holds AU$5.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 71% of total compensation represents salary and 29% is other remuneration. There isn't a significant difference between Empired and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Empired Limited's Growth

Over the past three years, Empired Limited has seen its earnings per share (EPS) grow by 17% per year. In the last year, its revenue is down 5.9%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Empired Limited Been A Good Investment?

Empired Limited has generated a total shareholder return of 8.2% over three years, so most shareholders wouldn't be too disappointed. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As we noted earlier, Empired pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, the EPS growth over three years is certainly impressive. Looking at the same time period, we think that the shareholder returns are respectable. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't say CEO compensation problematic.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 1 which is potentially serious) in Empired we think you should know about.

Important note: Empired 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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