Tim Salt became the CEO of GWA Group Limited (ASX:GWA) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for GWA Group

Comparing GWA Group Limited's CEO Compensation With the industry

According to our data, GWA Group Limited has a market capitalization of AU$668m, and paid its CEO total annual compensation worth AU$1.7m over the year to June 2020. We note that's a decrease of 9.4% compared to last year. In particular, the salary of AU$967.5k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between AU$272m and AU$1.1b had a median total CEO compensation of AU$1.2m. Hence, we can conclude that Tim Salt is remunerated higher than the industry median. Moreover, Tim Salt also holds AU$1.3m worth of GWA Group stock directly under their own name.

On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. GWA Group is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.

GWA Group Limited's Growth

GWA Group Limited has reduced its earnings per share by 3.8% a year over the last three years. Its revenue is up 4.4% over the last year.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has GWA Group Limited Been A Good Investment?

Since shareholders would have lost about 0.05% over three years, some GWA Group Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we noted earlier, GWA Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Arguably worse, we've been waiting for positive EPS growth for the last three years. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.