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How Is Kazia Therapeutics' (ASX:KZA) CEO Paid Relative To Peers?

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Simply Wall St
·3 min read
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This article will reflect on the compensation paid to James Garner who has served as CEO of Kazia Therapeutics Limited (ASX:KZA) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Kazia Therapeutics

Comparing Kazia Therapeutics Limited's CEO Compensation With the industry

According to our data, Kazia Therapeutics Limited has a market capitalization of AU$139m, and paid its CEO total annual compensation worth AU$945k over the year to June 2020. That's a notable increase of 37% on last year. Notably, the salary which is AU$473.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below AU$261m, reported a median total CEO compensation of AU$444k. Accordingly, our analysis reveals that Kazia Therapeutics Limited pays James Garner north of the industry median. Moreover, James Garner also holds AU$482k worth of Kazia Therapeutics stock directly under their own name.

Component

2020

2019

Proportion (2020)

Salary

AU$473k

AU$446k

50%

Other

AU$472k

AU$246k

50%

Total Compensation

AU$945k

AU$691k

100%

On an industry level, around 66% of total compensation represents salary and 34% is other remuneration. In Kazia Therapeutics' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
ceo-compensation

A Look at Kazia Therapeutics Limited's Growth Numbers

Kazia Therapeutics Limited saw earnings per share stay pretty flat over the last three years. In the last year, its revenue is down 31%.

We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Kazia Therapeutics Limited Been A Good Investment?

We think that the total shareholder return of 119%, over three years, would leave most Kazia Therapeutics 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.

To Conclude...

As we noted earlier, Kazia Therapeutics pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Importantly though, shareholder returns for the last three years have been excellent. On the other hand, EPS growth — over the same period — is not as impressive. We'd ideally want to see higher EPS growth, but CEO compensation seems to be within reason, given high shareholder returns.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for Kazia Therapeutics you should be aware of, and 3 of them shouldn't be ignored.

Important note: Kazia Therapeutics 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.