Is Macmahon Holdings Limited's (ASX:MAH) CEO Overpaid Relative To Its Peers?

Simply Wall St

Mick Finnegan has been the CEO of Macmahon Holdings Limited (ASX:MAH) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

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See our latest analysis for Macmahon Holdings

How Does Mick Finnegan's Compensation Compare With Similar Sized Companies?

Our data indicates that Macmahon Holdings Limited is worth AU$418m, and total annual CEO compensation is AU$1.1m. (This is based on the year to June 2018). We think total compensation is more important but we note that the CEO salary is lower, at AU$510k. We examined companies with market caps from AU$145m to AU$582m, and discovered that the median CEO total compensation of that group was AU$771k.

It would therefore appear that Macmahon Holdings Limited pays Mick Finnegan more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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 Macmahon Holdings has changed over time.

ASX:MAH CEO Compensation, May 23rd 2019

Is Macmahon Holdings Limited Growing?

Over the last three years Macmahon Holdings Limited has grown its earnings per share (EPS) by an average of 125% per year (using a line of best fit). It achieved revenue growth of 112% over the last year.

This demonstrates that the company has been improving recently. A good result. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.

Has Macmahon Holdings Limited Been A Good Investment?

I think that the total shareholder return of 95%, over three years, would leave most Macmahon Holdings Limited shareholders smiling. 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 the total CEO remuneration paid by Macmahon Holdings Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Macmahon Holdings (free visualization of insider trades).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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 editorial-team@simplywallst.com. 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.