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Steve Dropulich has been the CEO of Valmec Limited (ASX:VMX) since 2013. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Valmec
How Does Steve Dropulich's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Valmec Limited has a market cap of AU$28m, and is paying total annual CEO compensation of AU$477k. (This figure is for the year to June 2018). While we always look at total compensation first, we note that the salary component is less, at AU$374k. We looked at a group of companies with market capitalizations under AU$287m, and the median CEO total compensation was AU$353k.
It would therefore appear that Valmec Limited pays Steve Dropulich more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Valmec, below.
Is Valmec Limited Growing?
Over the last three years Valmec Limited has grown its earnings per share (EPS) by an average of 46% per year (using a line of best fit). In the last year, its revenue is up 8.8%.
This demonstrates that the company has been improving recently. A good result. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.
Has Valmec Limited Been A Good Investment?
I think that the total shareholder return of 57%, over three years, would leave most Valmec Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
We compared total CEO remuneration at Valmec Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if Valmec insiders are buying or selling shares.