This article will reflect on the compensation paid to Martin Smith who has served as CEO of Mainstream Group Holdings Limited (ASX:MAI) since 2017. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Mainstream Group Holdings.

View our latest analysis for Mainstream Group Holdings

Comparing Mainstream Group Holdings Limited's CEO Compensation With the industry

According to our data, Mainstream Group Holdings Limited has a market capitalization of AU$95m, and paid its CEO total annual compensation worth AU$721k over the year to June 2020. We note that's a decrease of 8.1% compared to last year. Notably, the salary which is AU$543.4k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below AU$278m, reported a median total CEO compensation of AU$507k. This suggests that Martin Smith is paid more than the median for the industry. What's more, Martin Smith holds AU$14m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 67% of total compensation out of all the companies we analyzed, while other remuneration made up 33% of the pie. According to our research, Mainstream Group Holdings 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 Mainstream Group Holdings Limited's Growth Numbers

Over the last three years, Mainstream Group Holdings Limited has shrunk its earnings per share by 36% per year. Its revenue is up 10% over the last year.

Few shareholders would be pleased to read that EPS have declined. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Mainstream Group Holdings Limited Been A Good Investment?

Boasting a total shareholder return of 46% over three years, Mainstream Group Holdings Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As we noted earlier, Mainstream Group Holdings pays its CEO higher than the norm for similar-sized companies belonging to the same industry. We feel that EPS have been a bit disappointing, but it's nice to see positive shareholder returns over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Mainstream Group Holdings that you should be aware of before investing.

Switching gears from Mainstream Group 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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