Is Altium Limited's (ASX:ALU) CEO Pay Justified?

Aram Mirkazemi became the CEO of Altium Limited (ASX:ALU) in 2014. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

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See our latest analysis for Altium

How Does Aram Mirkazemi's Compensation Compare With Similar Sized Companies?

According to our data, Altium Limited has a market capitalization of AU$4.0b, and pays its CEO total annual compensation worth US$1.6m. (This is based on the year to June 2018). While we always look at total compensation first, we note that the salary component is less, at US$500k. When we examined a selection of companies with market caps ranging from US$2.0b to US$6.4b, we found the median CEO total compensation was US$2.4m.

Most shareholders would consider it a positive that Aram Mirkazemi takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.

You can see a visual representation of the CEO compensation at Altium, below.

ASX:ALU CEO Compensation, May 15th 2019
ASX:ALU CEO Compensation, May 15th 2019

Is Altium Limited Growing?

Over the last three years Altium Limited has shrunk its earnings per share by an average of 16% per year (measured with a line of best fit). It achieved revenue growth of 24% over the last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.

Has Altium Limited Been A Good Investment?

I think that the total shareholder return of 460%, over three years, would leave most Altium 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...

Altium Limited is currently paying its CEO below what is normal for companies of its size.

Aram Mirkazemi receives relatively low remuneration compared to similar sized companies. And while the company isn't growing earnings per share, total returns have been pleasing. So, while it would be nice to have EPS growth, on our analysis the CEO compensation is not an issue. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Altium.

If you want to buy a stock that is better than Altium, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

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