This article will reflect on the compensation paid to Wes Stringer who has served as CEO of Probiotec Limited (ASX:PBP) since 2015. This analysis will also assess whether Probiotec pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Probiotec Limited's CEO Compensation With the industry
At the time of writing, our data shows that Probiotec Limited has a market capitalization of AU$173m, and reported total annual CEO compensation of AU$535k for the year to June 2020. Notably, that's an increase of 22% over the year before. Notably, the salary which is AU$352.3k, represents most of the total compensation being paid.
For comparison, other companies in the industry with market capitalizations below AU$263m, reported a median total CEO compensation of AU$414k. This suggests that Probiotec remunerates its CEO largely in line with the industry average. Moreover, Wes Stringer also holds AU$11m worth of Probiotec stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 66% of total compensation represents salary and 34% is other remuneration. Probiotec is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Probiotec Limited's Growth Numbers
Probiotec Limited's earnings per share (EPS) grew 20% per year over the last three years. It achieved revenue growth of 46% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Probiotec Limited Been A Good Investment?
Most shareholders would probably be pleased with Probiotec Limited for providing a total return of 184% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we touched on above, Probiotec Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Few would be critical of the leadership, since returns have been juicy and EPS are moving in the right direction. Indeed, many might consider that Wes is compensated rather modestly, given the solid company performance! Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Probiotec that investors should be aware of in a dynamic business environment.
Important note: Probiotec 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.
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