Dean Clarke has been the CEO of Mayfield Childcare Limited (ASX:MFD) since 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Dean Clarke's Compensation Compare With Similar Sized Companies?
According to our data, Mayfield Childcare Limited has a market capitalization of AU$24m, and paid its CEO total annual compensation worth AU$202k over the year to December 2019. That's a modest increase of 3.0% on the prior year year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$172k. We looked at a group of companies with market capitalizations under AU$304m, and the median CEO total compensation was AU$384k.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Mayfield Childcare. On an industry level, roughly 80% of total compensation represents salary and 20% is other remuneration. So it seems like there isn't a significant difference between Mayfield Childcare and the broader market, in terms of salary allocation in the overall compensation package.
At first glance this seems like a real positive for shareholders, since Dean Clarke is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance. You can see a visual representation of the CEO compensation at Mayfield Childcare, below.
Is Mayfield Childcare Limited Growing?
On average over the last three years, Mayfield Childcare Limited has seen earnings per share (EPS) move in a favourable direction by 40% each year (using a line of best fit). Its revenue is up 14% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.
Has Mayfield Childcare Limited Been A Good Investment?
Given the total loss of 1.1% over three years, many shareholders in Mayfield Childcare Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
Mayfield Childcare Limited is currently paying its CEO below what is normal for companies of its size.
Considering the underlying business is growing earnings, this would suggest the pay is modest. Few would deny that the total shareholder return over the last three years could have been a lot better. So while we don't think, Dean Clarke is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out. When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. Shifting gears from CEO pay for a second, we've picked out 5 warning signs for Mayfield Childcare that investors should be aware of in a dynamic business environment.
Important note: Mayfield Childcare may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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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. 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. Thank you for reading.