Shareholders Will Probably Hold Off On Increasing Nanosonics Limited's (ASX:NAN) CEO Compensation For The Time Being
Key Insights
Nanosonics to hold its Annual General Meeting on 3rd of November
Salary of AU$692.7k is part of CEO Michael Kavanagh's total remuneration
The total compensation is 46% higher than the average for the industry
Over the past three years, Nanosonics' EPS grew by 25% and over the past three years, the total loss to shareholders 28%
Shareholders of Nanosonics Limited (ASX:NAN) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 3rd of November could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
Check out our latest analysis for Nanosonics
Comparing Nanosonics Limited's CEO Compensation With The Industry
Our data indicates that Nanosonics Limited has a market capitalization of AU$1.1b, and total annual CEO compensation was reported as AU$2.0m for the year to June 2023. Notably, that's an increase of 43% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$693k.
In comparison with other companies in the Australian Medical Equipment industry with market capitalizations ranging from AU$635m to AU$2.5b, the reported median CEO total compensation was AU$1.4m. Hence, we can conclude that Michael Kavanagh is remunerated higher than the industry median. Furthermore, Michael Kavanagh directly owns AU$5.2m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | AU$693k | AU$703k | 34% |
Other | AU$1.4m | AU$728k | 66% |
Total Compensation | AU$2.0m | AU$1.4m | 100% |
Speaking on an industry level, nearly 62% of total compensation represents salary, while the remainder of 38% is other remuneration. Nanosonics sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Nanosonics Limited's Growth
Over the past three years, Nanosonics Limited has seen its earnings per share (EPS) grow by 25% per year. Its revenue is up 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Nanosonics Limited Been A Good Investment?
Since shareholders would have lost about 28% over three years, some Nanosonics Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Nanosonics (free visualization of insider trades).
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
