Shareholders Will Probably Hold Off On Increasing Cogstate Limited's (ASX:CGS) CEO Compensation For The Time Being
Key Insights
Cogstate to hold its Annual General Meeting on 25th of October
Total pay for CEO Brad O'Connor includes US$363.4k salary
Total compensation is 101% above industry average
Cogstate's EPS grew by 39% over the past three years while total shareholder return over the past three years was 81%
Under the guidance of CEO Brad O'Connor, Cogstate Limited (ASX:CGS) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 25th of October. However, some shareholders may still be hesitant of being overly generous with CEO compensation.
See our latest analysis for Cogstate
Comparing Cogstate Limited's CEO Compensation With The Industry
Our data indicates that Cogstate Limited has a market capitalization of AU$248m, and total annual CEO compensation was reported as US$1.1m for the year to June 2023. That's a notable decrease of 31% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$363k.
On examining similar-sized companies in the Australian Healthcare Services industry with market capitalizations between AU$157m and AU$628m, we discovered that the median CEO total compensation of that group was US$546k. This suggests that Brad O'Connor is paid more than the median for the industry. Furthermore, Brad O'Connor directly owns AU$6.4m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$363k | US$346k | 33% |
Other | US$735k | US$1.2m | 67% |
Total Compensation | US$1.1m | US$1.6m | 100% |
On an industry level, roughly 58% of total compensation represents salary and 42% is other remuneration. In Cogstate's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Cogstate Limited's Growth
Cogstate Limited's earnings per share (EPS) grew 39% per year over the last three years. Its revenue is down 10% over the previous year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Cogstate Limited Been A Good Investment?
We think that the total shareholder return of 81%, over three years, would leave most Cogstate Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 2 warning signs for Cogstate (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.
Important note: Cogstate 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.
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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.
