U.S. markets open in 7 hours 26 minutes

Is Allegra Orthopaedics Limited's (ASX:AMT) CEO Paid At A Competitive Rate?

Simply Wall St

Jenny Swain has been the CEO of Allegra Orthopaedics Limited (ASX:AMT) since 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Allegra Orthopaedics

How Does Jenny Swain's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Allegra Orthopaedics Limited has a market cap of AU$11m, and reported total annual CEO compensation of AU$333k for the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$282k. We examined a group of similar sized companies, with market capitalizations of below AU$305m. The median CEO total compensation in that group is AU$386k.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 80% of total compensation represents salary, while the remainder of 20% is other remuneration. Our data reveals that Allegra Orthopaedics allocates salary in line with the wider market.

That means Jenny Swain receives fairly typical remuneration for the CEO of a company that size. 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 Allegra Orthopaedics has changed over time.

ASX:AMT CEO Compensation May 21st 2020

Is Allegra Orthopaedics Limited Growing?

Over the last three years Allegra Orthopaedics Limited has shrunk its earnings per share by an average of 55% per year (measured with a line of best fit). It achieved revenue growth of 14% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Allegra Orthopaedics Limited Been A Good Investment?

Given the total loss of 44% over three years, many shareholders in Allegra Orthopaedics Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Jenny Swain is paid around the same as most CEOs of similar size companies.

Returns have been disappointing and the company is not growing its earnings per share. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. Taking a breather from CEO compensation, we've spotted 4 warning signs for Allegra Orthopaedics (of which 3 are potentially serious!) you should know about in order to have a holistic understanding of the stock.

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

Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email 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. 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. Thank you for reading.