The share price of Mitchell Services Limited (ASX:MSV) has struggled to grow by much over the last few years and probably has to do with the fact that earnings growth has gone backwards. The upcoming AGM on 21 October 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Mitchell Services

Comparing Mitchell Services Limited's CEO Compensation With the industry

According to our data, Mitchell Services Limited has a market capitalization of AU$102m, and paid its CEO total annual compensation worth AU$814k over the year to June 2021. Notably, that's an increase of 15% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$400k.

For comparison, other companies in the industry with market capitalizations below AU$272m, reported a median total CEO compensation of AU$360k. Accordingly, our analysis reveals that Mitchell Services Limited pays Andrew Elf north of the industry median. Moreover, Andrew Elf also holds AU$236k worth of Mitchell Services stock directly under their own name.

On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. In Mitchell Services' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Mitchell Services Limited's Growth Numbers

Mitchell Services Limited has reduced its earnings per share by 46% a year over the last three years. In the last year, its revenue is up 9.1%.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in 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 Mitchell Services Limited Been A Good Investment?

With a total shareholder return of 2.3% over three years, Mitchell Services Limited has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

The lacklustre share price returns along with the lack of earnings growth makes us think that a strong rebound in the share price may be difficult. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Mitchell Services that investors should look into moving forward.

Important note: Mitchell Services 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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 (at) simplywallst.com.