Key Insights

a2 Milk will host its Annual General Meeting on 15th of November Total pay for CEO David Bortolussi includes NZ$2.03m salary The total compensation is 692% higher than the average for the industry a2 Milk's three-year loss to shareholders was 72% while its EPS was down 26% over the past three years

The a2 Milk Company Limited (NZSE:ATM) has not performed well recently and CEO David Bortolussi will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 15th of November. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for a2 Milk

Comparing The a2 Milk Company Limited's CEO Compensation With The Industry

According to our data, The a2 Milk Company Limited has a market capitalization of NZ$3.1b, and paid its CEO total annual compensation worth NZ$5.8m over the year to June 2023. That's a notable increase of 48% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at NZ$2.0m.

In comparison with other companies in the New Zealander Food industry with market capitalizations ranging from NZ$1.7b to NZ$5.4b, the reported median CEO total compensation was NZ$738k. This suggests that David Bortolussi is paid more than the median for the industry. Moreover, David Bortolussi also holds NZ$3.4m worth of a2 Milk stock directly under their own name.

Component 2023 2022 Proportion (2023) Salary NZ$2.0m NZ$2.0m 35% Other NZ$3.8m NZ$2.0m 65% Total Compensation NZ$5.8m NZ$3.9m 100%

Talking in terms of the industry, salary represented approximately 81% of total compensation out of all the companies we analyzed, while other remuneration made up 19% of the pie. a2 Milk 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.

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A Look at The a2 Milk Company Limited's Growth Numbers

Over the last three years, The a2 Milk Company Limited has shrunk its earnings per share by 26% per year. Its revenue is up 10% over the last year.

Few shareholders would be pleased to read that EPS have declined. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. 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 The a2 Milk Company Limited Been A Good Investment?

The return of -72% over three years would not have pleased The a2 Milk Company Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling a2 Milk (free visualization of insider trades).

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

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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.