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Rick Carreon has been the CEO of ImpediMed Limited (ASX:IPD) since 2012, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether ImpediMed pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing ImpediMed Limited's CEO Compensation With the industry
According to our data, ImpediMed Limited has a market capitalization of AU$145m, and paid its CEO total annual compensation worth AU$1.1m over the year to June 2020. We note that's a decrease of 54% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$558k.
On comparing similar-sized companies in the industry with market capitalizations below AU$272m, we found that the median total CEO compensation was AU$596k. Accordingly, our analysis reveals that ImpediMed Limited pays Rick Carreon north of the industry median. Moreover, Rick Carreon also holds AU$474k worth of ImpediMed stock directly under their own name.
Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. ImpediMed sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
ImpediMed Limited's Growth
ImpediMed Limited's earnings per share (EPS) grew 16% per year over the last three years. It achieved revenue growth of 38% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has ImpediMed Limited Been A Good Investment?
Since shareholders would have lost about 84% over three years, some ImpediMed Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we touched on above, ImpediMed Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the company has impressed with its EPS growth, but shareholder returns — over the same period — have been disappointing. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 1 which can't be ignored) in ImpediMed we think you should know about.
Important note: ImpediMed 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.
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