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A Quick Analysis On ResMed's (NYSE:RMD) CEO Salary

Simply Wall St
·3 min read

This article will reflect on the compensation paid to Mick Farrell who has served as CEO of ResMed Inc. (NYSE:RMD) since 2013. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for ResMed

Comparing ResMed Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that ResMed Inc. has a market capitalization of US$31b, and reported total annual CEO compensation of US$10m for the year to June 2020. That's a notable increase of 8.2% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$10m. From this we gather that Mick Farrell is paid around the median for CEOs in the industry. What's more, Mick Farrell holds US$87m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2020

2019

Proportion (2020)

Salary

US$1.0m

US$967k

10%

Other

US$9.4m

US$8.7m

90%

Total Compensation

US$10m

US$9.6m

100%

On an industry level, around 21% of total compensation represents salary and 79% is other remuneration. ResMed pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

A Look at ResMed Inc.'s Growth Numbers

Over the past three years, ResMed Inc. has seen its earnings per share (EPS) grow by 24% per year. Its revenue is up 12% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has ResMed Inc. Been A Good Investment?

We think that the total shareholder return of 155%, over three years, would leave most ResMed Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As we noted earlier, ResMed pays its CEO in line with similar-sized companies belonging to the same industry. The company is growing EPS and total shareholder returns have been pleasing. Indeed, many might consider that Mick is compensated rather modestly, given the solid company performance! In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.

Whatever your view on compensation, you might want to check if insiders are buying or selling ResMed shares (free trial).

Important note: ResMed 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.