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Why Fisher & Paykel Healthcare Corporation Limited's (NZSE:FPH) CEO Pay Matters To You

Simply Wall St

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Lewis Gradon has been the CEO of Fisher & Paykel Healthcare Corporation Limited (NZSE:FPH) since 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Fisher & Paykel Healthcare

How Does Lewis Gradon's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Fisher & Paykel Healthcare Corporation Limited has a market cap of NZ$8.7b, and is paying total annual CEO compensation of NZ$2.7m. (This figure is for the year to March 2019). We note that's an increase of 16% above last year. While we always look at total compensation first, we note that the salary component is less, at NZ$1.2m. We examined companies with market caps from NZ$6.1b to NZ$18b, and discovered that the median CEO total compensation of that group was NZ$4.3m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at Fisher & Paykel Healthcare has changed from year to year.

NZSE:FPH CEO Compensation, June 14th 2019

Is Fisher & Paykel Healthcare Corporation Limited Growing?

On average over the last three years, Fisher & Paykel Healthcare Corporation Limited has grown earnings per share (EPS) by 12% each year (using a line of best fit). In the last year, its revenue is up 9.1%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.

Has Fisher & Paykel Healthcare Corporation Limited Been A Good Investment?

I think that the total shareholder return of 56%, over three years, would leave most Fisher & Paykel Healthcare Corporation Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Fisher & Paykel Healthcare Corporation Limited is currently paying its CEO below what is normal for companies of its size. Since the business is growing, many would argue this suggests the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Lewis Gradon deserves a raise!

It is relatively rare to see a modestly paid CEO when performance is so impressive. The cherry on top would be if company insiders are buying shares with their own money. Whatever your view on compensation, you might want to check if insiders are buying or selling Fisher & Paykel Healthcare shares (free trial).

If you want to buy a stock that is better than Fisher & Paykel Healthcare, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. Thank you for reading.