Rob Velletri became the CEO of Monadelphous Group Limited (ASX:MND) in 2003, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Monadelphous Group.

View our latest analysis for Monadelphous Group

Comparing Monadelphous Group Limited's CEO Compensation With the industry

At the time of writing, our data shows that Monadelphous Group Limited has a market capitalization of AU$865m, and reported total annual CEO compensation of AU$1.2m for the year to June 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of AU$946.5k, 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$568m and AU$2.3b had a median total CEO compensation of AU$1.5m. This suggests that Monadelphous Group remunerates its CEO largely in line with the industry average. Moreover, Rob Velletri also holds AU$19m worth of Monadelphous Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 66% of total compensation represents salary, while the remainder of 34% is other remuneration. Monadelphous Group is paying a higher share of its remuneration through a salary in comparison to the overall 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.

Monadelphous Group Limited's Growth

Over the last three years, Monadelphous Group Limited has shrunk its earnings per share by 14% per year. The trailing twelve months of revenue was pretty much the same as the prior period.

The decline in EPS is a bit concerning. And the flat revenue is seriously uninspiring. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Monadelphous Group Limited Been A Good Investment?

Given the total shareholder loss of 43% over three years, many shareholders in Monadelphous Group Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, Monadelphous Group Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, EPS growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Monadelphous Group that investors should be aware of in a dynamic business environment.

Important note: Monadelphous Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.