Yahoo Finance Should You Be Pleased About The CEO Pay At Embelton Limited's (ASX:EMB)
James Embelton has been the CEO of Embelton Limited (ASX:EMB) since 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Embelton
How Does James Embelton's Compensation Compare With Similar Sized Companies?
Our data indicates that Embelton Limited is worth AU$22m, and total annual CEO compensation was reported as AU$451k for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$350k. We looked at a group of companies with market capitalizations under AU$306m, and the median CEO total compensation was AU$383k.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 57% of total compensation represents salary and 43% is other remuneration. According to our research, Embelton has allocated a higher percentage of pay to salary in comparison to the broader sector.
So James Embelton receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. The graphic below shows how CEO compensation at Embelton has changed from year to year.
Is Embelton Limited Growing?
Embelton Limited has reduced its earnings per share by an average of 17% a year, over the last three years (measured with a line of best fit). It saw its revenue drop 10% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Embelton Limited Been A Good Investment?
Given the total loss of 6.1% over three years, many shareholders in Embelton Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
James Embelton is paid around what is normal for the leaders of comparable size companies.
After looking at EPS and total shareholder returns, it's certainly hard to argue the company has performed well, since both metrics are down. Few would argue that it's wise for the company to pay any more, before returns improve. Looking into other areas, we've picked out 3 warning signs for Embelton that investors should think about before committing capital to this stock.
Important note: Embelton may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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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. Thank you for reading.
