Should You Worry About Valmec Limited's (ASX:VMX) CEO Pay?

Steve Dropulich became the CEO of Valmec Limited (ASX:VMX) in 2013. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Valmec

How Does Steve Dropulich's Compensation Compare With Similar Sized Companies?

According to our data, Valmec Limited has a market capitalization of AU$35m, and paid its CEO total annual compensation worth AU$474k over the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$400k. We examined a group of similar sized companies, with market capitalizations of below AU$293m. The median CEO total compensation in that group is AU$382k.

So Steve Dropulich is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

You can see, below, how CEO compensation at Valmec has changed over time.

Is Valmec Limited Growing?

On average over the last three years, Valmec Limited has grown earnings per share (EPS) by 52% each year (using a line of best fit). It achieved revenue growth of 6.7% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.

Has Valmec Limited Been A Good Investment?

I think that the total shareholder return of 139%, over three years, would leave most Valmec Limited shareholders smiling. 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.

In Summary...

Remuneration for Steve Dropulich is close enough to the median pay for a CEO of a similar sized company .

Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. Whatever your view on compensation, you might want to check if insiders are buying or selling Valmec shares (free trial).

Important note: Valmec 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.

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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