This article will reflect on the compensation paid to Chris Richards who has served as CEO of Apiam Animal Health Limited (ASX:AHX) since 2015. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Apiam Animal Health Limited's CEO Compensation With the industry
According to our data, Apiam Animal Health Limited has a market capitalization of AU$61m, and paid its CEO total annual compensation worth AU$401k over the year to June 2020. That's a fairly small increase of 3.1% over the previous year. We note that the salary portion, which stands at AU$354.7k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$276m, the reported median total CEO compensation was AU$561k. So it looks like Apiam Animal Health compensates Chris Richards in line with the median for the industry. Furthermore, Chris Richards directly owns AU$16m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 68% of total compensation represents salary, while the remainder of 32% is other remuneration. According to our research, Apiam Animal Health has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Apiam Animal Health Limited's Growth
Over the last three years, Apiam Animal Health Limited has shrunk its earnings per share by 8.8% per year. In the last year, its revenue is up 5.9%.
Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Apiam Animal Health Limited Been A Good Investment?
Since shareholders would have lost about 24% over three years, some Apiam Animal Health Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
As previously discussed, Chris is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 4 warning signs for Apiam Animal Health that investors should look into moving forward.
Important note: Apiam Animal Health is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.