The CEO of Compumedics Limited (ASX:CMP) is David Burton. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does David Burton's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Compumedics Limited has a market cap of AU$140m, and reported total annual CEO compensation of AU$250k for the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$228k. We examined a group of similar sized companies, with market capitalizations of below AU$286m. The median CEO total compensation in that group is AU$381k.
A first glance this seems like a real positive for shareholders, since David Burton is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business.
The graphic below shows how CEO compensation at Compumedics has changed from year to year.
Is Compumedics Limited Growing?
Over the last three years Compumedics Limited has grown its earnings per share (EPS) by an average of 20% per year (using a line of best fit). It achieved revenue growth of 12% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Shareholders might be interested in this free visualization of analyst forecasts.
Has Compumedics Limited Been A Good Investment?
With a three year total loss of 6.0%, Compumedics Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
It appears that Compumedics Limited remunerates its CEO below most similar sized companies.
Considering the underlying business is growing earnings, this would suggest the pay is modest. Few would deny that the total shareholder return over the last three years could have been a lot better. We're not critical of the remuneration David Burton receives, but it would be good to see improved returns to shareholders before the remuneration grows too much. This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Compumedics.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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