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Is Fisher & Paykel Healthcare Corporation Limited's (NZSE:FPH) CEO Overpaid Relative To Its Peers?

Simply Wall St

In 2016 Lewis Gradon was appointed CEO of Fisher & Paykel Healthcare Corporation Limited (NZSE:FPH). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Fisher & Paykel Healthcare

How Does Lewis Gradon's Compensation Compare With Similar Sized Companies?

Our data indicates that Fisher & Paykel Healthcare Corporation Limited is worth NZ$13b, and total annual CEO compensation was reported as NZ$2.7m for the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at NZ$1.2m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of NZ$5.9b to NZ$18b. The median total CEO compensation was NZ$1.8m.

Thus we can conclude that Lewis Gradon receives more in total compensation than the median of a group of companies in the same market, and of similar size to Fisher & Paykel Healthcare Corporation Limited. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at Fisher & Paykel Healthcare, below.

NZSE:FPH CEO Compensation, December 31st 2019

Is Fisher & Paykel Healthcare Corporation Limited Growing?

Over the last three years Fisher & Paykel Healthcare Corporation Limited has grown its earnings per share (EPS) by an average of 12% per year (using a line of best fit). Its revenue is up 9.3% over last year.

This demonstrates that the company has been improving recently. A good result. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. You might want to check this free visual report on analyst forecasts for future earnings.

Has Fisher & Paykel Healthcare Corporation Limited Been A Good Investment?

I think that the total shareholder return of 176%, over three years, would leave most Fisher & Paykel Healthcare Corporation Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

We compared the total CEO remuneration paid by Fisher & Paykel Healthcare Corporation Limited, and compared it to remuneration at a group of similar sized companies. 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. In addition, shareholders have done well over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if Fisher & Paykel Healthcare insiders are buying or selling shares.

Important note: Fisher & Paykel Healthcare 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.

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.

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. Thank you for reading.