In This Article:
Jeff Adams has been the CEO of Metcash Limited (ASX:MTS) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Metcash.
See our latest analysis for Metcash
Comparing Metcash Limited's CEO Compensation With the industry
According to our data, Metcash Limited has a market capitalization of AU$3.0b, and paid its CEO total annual compensation worth AU$3.2m over the year to April 2020. That's a notable decrease of 13% on last year. We note that the salary portion, which stands at AU$1.80m constitutes the majority of total compensation received by the CEO.
On comparing similar companies from the same industry with market caps ranging from AU$1.4b to AU$4.4b, we found that the median CEO total compensation was AU$3.2m. So it looks like Metcash compensates Jeff Adams in line with the median for the industry.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$1.8m | AU$1.8m | 57% |
| Other | AU$1.4m | AU$1.9m | 43% |
| Total Compensation | AU$3.2m | AU$3.7m | 100% |
On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. Metcash is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Metcash Limited's Growth
Over the last three years, Metcash Limited has shrunk its earnings per share by 50% per year. In the last year, its revenue is up 2.9%.
Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. 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 Metcash Limited Been A Good Investment?
With a total shareholder return of 32% over three years, Metcash Limited shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
As previously discussed, Jeff is compensated close to the median for companies of its size, and which belong to the same industry. Metcash has had a tough time in recent years, with declining EPS growth, and although shareholder returns are stable, they are hardly worth celebrating. This doesn't compare well with CEO compensation, which is largely in line with the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.