Here's Why Nova Eye Medical Limited's (ASX:EYE) CEO Compensation Is The Least Of Shareholders Concerns
Key Insights
Nova Eye Medical's Annual General Meeting to take place on 22nd of November
Total pay for CEO Tom Spurling includes AU$210.8k salary
The total compensation is 52% less than the average for the industry
Nova Eye Medical's EPS declined by 14% over the past three years while total shareholder loss over the past three years was 62%
The performance at Nova Eye Medical Limited (ASX:EYE) has been rather lacklustre of late and shareholders may be wondering what CEO Tom Spurling is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 22nd of November. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We think CEO compensation looks appropriate given the data we have put together.
See our latest analysis for Nova Eye Medical
How Does Total Compensation For Tom Spurling Compare With Other Companies In The Industry?
At the time of writing, our data shows that Nova Eye Medical Limited has a market capitalization of AU$25m, and reported total annual CEO compensation of AU$253k for the year to June 2023. That's a notable decrease of 19% on last year. In particular, the salary of AU$210.8k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the Australian Medical Equipment industry with market capitalizations below AU$307m, reported a median total CEO compensation of AU$521k. That is to say, Tom Spurling is paid under the industry median.
Component | 2023 | 2022 | Proportion (2023) |
Salary | AU$211k | AU$191k | 83% |
Other | AU$42k | AU$120k | 17% |
Total Compensation | AU$253k | AU$311k | 100% |
On an industry level, roughly 62% of total compensation represents salary and 38% is other remuneration. Nova Eye Medical pays out 83% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Nova Eye Medical Limited's Growth Numbers
Nova Eye Medical Limited has reduced its earnings per share by 14% a year over the last three years. In the last year, its revenue is up 27%.
The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Nova Eye Medical Limited Been A Good Investment?
The return of -62% over three years would not have pleased Nova Eye Medical Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
The loss to shareholders over the past three years is certainly concerning. The downward trend in share price performance may be attributable to the the fact that earnings growth has gone backwards. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 4 warning signs for Nova Eye Medical that you should be aware of before investing.
Important note: Nova Eye Medical 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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
