Mick Finnegan has been the CEO of Macmahon Holdings Limited (ASX:MAH) since 2016, 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 Macmahon Holdings.
Comparing Macmahon Holdings Limited's CEO Compensation With the industry
Our data indicates that Macmahon Holdings Limited has a market capitalization of AU$482m, and total annual CEO compensation was reported as AU$2.0m for the year to June 2020. We note that's an increase of 27% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$623k.
For comparison, other companies in the same industry with market capitalizations ranging between AU$284m and AU$1.1b had a median total CEO compensation of AU$1.0m. Accordingly, our analysis reveals that Macmahon Holdings Limited pays Mick Finnegan north of the industry median. Moreover, Mick Finnegan also holds AU$1.2m worth of Macmahon Holdings stock directly under their own name.
On an industry level, around 70% of total compensation represents salary and 30% is other remuneration. It's interesting to note that Macmahon Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Macmahon Holdings Limited's Growth
Over the past three years, Macmahon Holdings Limited has seen its earnings per share (EPS) grow by 60% per year. In the last year, its revenue is up 25%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Macmahon Holdings Limited Been A Good Investment?
With a total shareholder return of 7.8% over three years, Macmahon Holdings Limited has done okay by shareholders. 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.
As we noted earlier, Macmahon Holdings pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed us with its EPS growth, over three years. We also note that, over the same time frame, shareholder returns haven't been bad. So, considering the EPS growth we do not wish to criticize CEO compensation, though we'd recommend further research on management.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for Macmahon Holdings (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from Macmahon Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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