Is LBT Innovations Limited's (ASX:LBT) CEO Being Overpaid?
Brent Barnes became the CEO of LBT Innovations Limited (ASX:LBT) in 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
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View our latest analysis for LBT Innovations
How Does Brent Barnes's Compensation Compare With Similar Sized Companies?
According to our data, LBT Innovations Limited has a market capitalization of AU$33m, and pays its CEO total annual compensation worth AU$774k. (This number is for the twelve months until June 2018). While we always look at total compensation first, we note that the salary component is less, at AU$281k. We looked at a group of companies with market capitalizations under AU$291m, and the median CEO total compensation was AU$355k.
As you can see, Brent Barnes is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean LBT Innovations Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at LBT Innovations has changed over time.
Is LBT Innovations Limited Growing?
On average over the last three years, LBT Innovations Limited has shrunk earnings per share by 80% each year (measured with a line of best fit). Its revenue is up 16% over last year.
Unfortunately, earnings per share have trended lower over the last three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has LBT Innovations Limited Been A Good Investment?
Since shareholders would have lost about 9.7% over three years, some LBT Innovations Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
We examined the amount LBT Innovations Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
Over the same period, investors would have come away with nothing in the way of share price gains. This analysis suggests to us that the CEO is paid too generously! Shareholders may want to check for free if LBT Innovations insiders are buying or selling shares.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
