Here's Why Shareholders May Want To Be Cautious With Increasing Genetic Technologies Limited's (ASX:GTG) CEO Pay Packet
Key Insights
Genetic Technologies to hold its Annual General Meeting on 21st of November
Total pay for CEO Simon Morriss includes AU$330.6k salary
The total compensation is similar to the average for the industry
Genetic Technologies' EPS grew by 9.0% over the past three years while total shareholder loss over the past three years was 71%
In the past three years, the share price of Genetic Technologies Limited (ASX:GTG) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 21st of November could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
View our latest analysis for Genetic Technologies
Comparing Genetic Technologies Limited's CEO Compensation With The Industry
Our data indicates that Genetic Technologies Limited has a market capitalization of AU$23m, and total annual CEO compensation was reported as AU$588k for the year to June 2023. We note that's a small decrease of 6.5% on last year. In particular, the salary of AU$330.6k, makes up a fairly large portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the Australia Life Sciences industry with market capitalizations below AU$306m, we found that the median total CEO compensation was AU$573k. From this we gather that Simon Morriss is paid around the median for CEOs in the industry.
Component | 2023 | 2022 | Proportion (2023) |
Salary | AU$331k | AU$347k | 56% |
Other | AU$257k | AU$282k | 44% |
Total Compensation | AU$588k | AU$629k | 100% |
Speaking on an industry level, nearly 79% of total compensation represents salary, while the remainder of 21% is other remuneration. Genetic Technologies pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Genetic Technologies Limited's Growth
Over the past three years, Genetic Technologies Limited has seen its earnings per share (EPS) grow by 9.0% per year. In the last year, its revenue is up 12%.
We think the revenue growth is good. And the improvement in EPSis modest but respectable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Genetic Technologies Limited Been A Good Investment?
With a total shareholder return of -71% over three years, Genetic Technologies Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 5 warning signs for Genetic Technologies (of which 3 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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.
