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The CEO Of ASX Limited (ASX:ASX) Might See A Pay Rise On The Horizon

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  • ASXFF
  • ASXFY

Shareholders will be pleased by the robust performance of ASX Limited (ASX:ASX) recently and this will be kept in mind in the upcoming AGM on 29 September 2021. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

View our latest analysis for ASX

Comparing ASX Limited's CEO Compensation With the industry

At the time of writing, our data shows that ASX Limited has a market capitalization of AU$16b, and reported total annual CEO compensation of AU$4.3m for the year to June 2021. Notably, that's an increase of 19% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$2.0m.

In comparison with other companies in the industry with market capitalizations over AU$11b , the reported median total CEO compensation was AU$10m. In other words, ASX pays its CEO lower than the industry median. What's more, Dominic Stevens holds AU$5.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2021

2020

Proportion (2021)

Salary

AU$2.0m

AU$2.0m

46%

Other

AU$2.3m

AU$1.6m

54%

Total Compensation

AU$4.3m

AU$3.6m

100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. In ASX's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at ASX Limited's Growth Numbers

Over the past three years, ASX Limited has seen its earnings per share (EPS) grow by 2.6% per year. Its revenue is down 7.1% over the previous year.

We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 ASX Limited Been A Good Investment?

Boasting a total shareholder return of 45% over three years, ASX Limited has done well by shareholders. 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.

To Conclude...

Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for ASX that investors should be aware of in a dynamic business environment.

Important note: ASX 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.

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