Wayne Paterson has been the CEO of Admedus Limited (ASX:AHZ) since 2016. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Wayne Paterson's Compensation Compare With Similar Sized Companies?
According to our data, Admedus Limited has a market capitalization of AU$46m, and paid its CEO total annual compensation worth AU$1.9m over the year to December 2019. We note that's an increase of 54% above last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$898k. We looked at a group of companies with market capitalizations under AU$315m, and the median CEO total compensation was AU$390k.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Admedus stands. On an industry level, roughly 78% of total compensation represents salary and 22% is other remuneration. Non-salary compensation represents a greater slice of the remuneration pie for Admedus, in sharp contrast to the overall sector.
It would therefore appear that Admedus Limited pays Wayne Paterson more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. The graphic below shows how CEO compensation at Admedus has changed from year to year.
Is Admedus Limited Growing?
Over the last three years Admedus Limited has seen earnings per share (EPS) move in a positive direction by an average of 23% per year (using a line of best fit). It saw its revenue drop 33% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Admedus Limited Been A Good Investment?
Given the total loss of 75% over three years, many shareholders in Admedus Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We compared the total CEO remuneration paid by Admedus Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. This doesn't look great when you consider CEO remuneration is up on last year. While EPS is moving in the right direction, we'd say shareholders would want better returns before the CEO is paid much more. On another note, Admedus has 5 warning signs (and 2 which can't be ignored) we think you should know about.
If you want to buy a stock that is better than Admedus, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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