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Is Admedus Limited (ASX:AHZ) Overpaying Its CEO?

Simply Wall St

Wayne Paterson became the CEO of Admedus Limited (ASX:AHZ) in 2017. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Admedus

How Does Wayne Paterson's Compensation Compare With Similar Sized Companies?

Our data indicates that Admedus Limited is worth AU$41m, and total annual CEO compensation was reported as AU$1.2m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at AU$835k. We examined a group of similar sized companies, with market capitalizations of below AU$296m. The median CEO total compensation in that group is AU$381k.

As you can see, Wayne Paterson is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Admedus Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

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

ASX:AHZ CEO Compensation, October 15th 2019

Is Admedus Limited Growing?

Over the last three years Admedus Limited has grown its earnings per share (EPS) by an average of 17% per year (using a line of best fit). Its revenue is down 2.4% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Admedus Limited Been A Good Investment?

Given the total loss of 84% over three years, many shareholders in Admedus Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared total CEO remuneration at Admedus Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. Whatever your view on compensation, you might want to check if insiders are buying or selling Admedus shares (free trial).

Important note: Admedus 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.