Shareholders Will Probably Hold Off On Increasing Rhinomed Limited's (ASX:RNO) CEO Compensation For The Time Being
Key Insights
Rhinomed to hold its Annual General Meeting on 16th of November
CEO Michael Johnson's total compensation includes salary of AU$371.0k
The total compensation is similar to the average for the industry
Rhinomed's three-year loss to shareholders was 83% while its EPS grew by 14% over the past three years
In the past three years, the share price of Rhinomed Limited (ASX:RNO) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 16th of November. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
See our latest analysis for Rhinomed
How Does Total Compensation For Michael Johnson Compare With Other Companies In The Industry?
At the time of writing, our data shows that Rhinomed Limited has a market capitalization of AU$8.6m, and reported total annual CEO compensation of AU$532k for the year to June 2023. That's a notable increase of 44% on last year. Notably, the salary which is AU$371.0k, represents most of the total compensation being paid.
For comparison, other companies in the Australian Pharmaceuticals industry with market capitalizations below AU$315m, reported a median total CEO compensation of AU$680k. From this we gather that Michael Johnson is paid around the median for CEOs in the industry.
Component | 2023 | 2022 | Proportion (2023) |
Salary | AU$371k | AU$301k | 70% |
Other | AU$161k | AU$68k | 30% |
Total Compensation | AU$532k | AU$369k | 100% |
On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. Rhinomed pays out 70% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Rhinomed Limited's Growth
Rhinomed Limited's earnings per share (EPS) grew 14% per year over the last three years. It saw its revenue drop 16% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Rhinomed Limited Been A Good Investment?
Few Rhinomed Limited shareholders would feel satisfied with the return of -83% over three years. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. 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 a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 5 warning signs for Rhinomed that you should be aware of before investing.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.
