Is Medical Developments International Limited's (ASX:MVP) CEO Salary Justified?
John Sharman has been the CEO of Medical Developments International Limited (ASX:MVP) since 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Medical Developments International
How Does John Sharman's Compensation Compare With Similar Sized Companies?
Our data indicates that Medical Developments International Limited is worth AU$592m, and total annual CEO compensation was reported as AU$644k for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$366k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$290m to AU$1.2b. The median total CEO compensation was AU$1.0m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at Medical Developments International has changed over time.
Is Medical Developments International Limited Growing?
On average over the last three years, Medical Developments International Limited has shrunk earnings per share by 46% each year (measured with a line of best fit). In the last year, its revenue is up 20%.
Sadly for shareholders, earnings per share are actually down, over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Medical Developments International Limited Been A Good Investment?
Boasting a total shareholder return of 77% over three years, Medical Developments International Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
Medical Developments International Limited is currently paying its CEO below what is normal for companies of its size.
John Sharman receives relatively low remuneration compared to similar sized companies. And while the company isn't growing earnings per share, total returns have been pleasing. Although we could see higher EPS growth, we'd argue the remuneration is not an issue, based on these observations. So you may want to check if insiders are buying Medical Developments International shares with their own money (free access).
Important note: Medical Developments International may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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.
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