Shareholders may be wondering what CEO Andrew Barkla plans to do to improve the less than great performance at IDP Education Limited (ASX:IEL) recently. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 18 October 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. In our opinion, CEO compensation does not look excessive and we discuss why.

See our latest analysis for IDP Education

How Does Total Compensation For Andrew Barkla Compare With Other Companies In The Industry?

Our data indicates that IDP Education Limited has a market capitalization of AU$9.7b, and total annual CEO compensation was reported as AU$2.6m for the year to June 2021. We note that's an increase of 15% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$946k.

In comparison with other companies in the industry with market capitalizations ranging from AU$5.4b to AU$16b, the reported median CEO total compensation was AU$3.9m. This suggests that Andrew Barkla is paid below the industry median. Moreover, Andrew Barkla also holds AU$8.4m worth of IDP Education stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 62% of total compensation represents salary and 38% is other remuneration. IDP Education sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at IDP Education Limited's Growth Numbers

Over the last three years, IDP Education Limited has shrunk its earnings per share by 12% per year. Its revenue is down 9.9% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has IDP Education Limited Been A Good Investment?

Most shareholders would probably be pleased with IDP Education Limited for providing a total return of 261% over three years. 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.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for IDP Education that investors should think about before committing capital to this stock.

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

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.

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