Is Costa Group Holdings Limited's (ASX:CGC) CEO Paid At A Competitive Rate?

In 2010 Harry Debney was appointed CEO of Costa Group Holdings Limited (ASX:CGC). 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Costa Group Holdings

How Does Harry Debney's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Costa Group Holdings Limited has a market cap of AU$1.1b, and reported total annual CEO compensation of AU$1.2m for the year to December 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$1.0m. We looked at a group of companies with market capitalizations from AU$649m to AU$2.6b, and the median CEO total compensation was AU$1.8m.

Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Costa Group Holdings. On an industry level, roughly 59% of total compensation represents salary and 41% is other remuneration. Costa Group Holdings pays out 86% of aggregate payment in the shape of a salary, which is significantly higher than the industry average.

At first glance this seems like a real positive for shareholders, since Harry Debney is paid less than the average total compensation paid by similar sized companies. 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 Costa Group Holdings, below.

Is Costa Group Holdings Limited Growing?

Costa Group Holdings Limited has reduced its earnings per share by an average of 44% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 5.8%.

Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has Costa Group Holdings Limited Been A Good Investment?

Since shareholders would have lost about 29% over three years, some Costa Group Holdings Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

It looks like Costa Group Holdings Limited pays its CEO less than similar sized companies.

Shareholders should note that compensation for Harry Debney is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. On another note, we've spotted 1 warning sign for Costa Group Holdings that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.

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