James Embelton became the CEO of Embelton Limited (ASX:EMB) in 2010. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
Check out 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$21m, and total annual CEO compensation was reported as AU$496k for the year to June 2018. While we always look at total compensation first, we note that the salary component is less, at AU$343k. We took a group of companies with market capitalizations below AU$295m, and calculated the median CEO total compensation to be AU$370k.
Thus we can conclude that James Embelton receives more in total compensation than the median of a group of companies in the same market, and of similar size to Embelton Limited. However, this doesn't necessarily mean the pay 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, below, how CEO compensation at Embelton has changed over time.
Is Embelton Limited Growing?
Embelton Limited has reduced its earnings per share by an average of 2.5% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down 2.1%.
In the last three years the company has failed to grow earnings per share. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Embelton Limited Been A Good Investment?
Most shareholders would probably be pleased with Embelton Limited for providing a total return of 38% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
We compared total CEO remuneration at Embelton Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. On the other hand, returns have been good, so the company is doing something right. So on this analysis we'd stop short of criticizing the level of CEO compensation. Shareholders may want to check for free if Embelton insiders are buying or selling shares.