Mike Perry has been the CEO of Avita Medical Limited (ASX:AVH) since 2017. First, this article will compare CEO compensation with compensation at similar sized companies. 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 process should give us an idea about how appropriately the CEO is paid.
How Does Mike Perry's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Avita Medical Limited has a market cap of AU$1.2b, and reported total annual CEO compensation of AU$2.4m for the year to June 2019. That's a notable increase of 35% on last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$664k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from AU$585m to AU$2.3b, and discovered that the median CEO total compensation of that group was AU$1.5m.
It would therefore appear that Avita Medical Limited pays Mike Perry more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Avita Medical, below.
Is Avita Medical Limited Growing?
Over the last three years Avita Medical Limited has shrunk its earnings per share by an average of 11% per year (measured with a line of best fit). It achieved revenue growth of 543% over the last year.
The reduction in earnings per share, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. It could be important to check this free visual depiction of what analysts expect for the future.
Has Avita Medical Limited Been A Good Investment?
Boasting a total shareholder return of 388% over three years, Avita Medical Limited has done well by shareholders. 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.
We examined the amount Avita Medical Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Over the last three years returns to investors have been great, though we might have liked stronger business growth. As a result of the juicy return to investors, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if Avita Medical insiders are buying or selling shares.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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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