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Why Mediclinic International's (LON:MDC) CEO Pay Matters

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Simply Wall St
·3 min read
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Ronnie van der Merwe became the CEO of Mediclinic International plc (LON:MDC) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Mediclinic International pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Mediclinic International

How Does Total Compensation For Ronnie van der Merwe Compare With Other Companies In The Industry?

According to our data, Mediclinic International plc has a market capitalization of UK£2.1b, and paid its CEO total annual compensation worth UK£601k over the year to March 2020. That's a notable decrease of 13% on last year. In particular, the salary of UK£543.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between UK£1.5b and UK£4.7b had a median total CEO compensation of UK£868k. In other words, Mediclinic International pays its CEO lower than the industry median. Moreover, Ronnie van der Merwe also holds UK£144k worth of Mediclinic International stock directly under their own name.

Component

2020

2019

Proportion (2020)

Salary

UK£543k

UK£447k

90%

Other

UK£58k

UK£242k

10%

Total Compensation

UK£601k

UK£689k

100%

Speaking on an industry level, nearly 74% of total compensation represents salary, while the remainder of 26% is other remuneration. Mediclinic International pays out 90% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ceo-compensation

A Look at Mediclinic International plc's Growth Numbers

Mediclinic International plc has seen its earnings per share (EPS) increase by 1.6% a year over the past three years. In the last year, its revenue is down 2.6%.

We generally like to see a little revenue growth, but the modest EPSgrowth gives us some relief. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Mediclinic International plc Been A Good Investment?

Given the total shareholder loss of 53% over three years, many shareholders in Mediclinic International plc are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As previously discussed, Ronnie is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company isn't growing and total shareholder returns have been disappointing. We're not critical of the remuneration Ronnie receives, but it would be good to see improved returns to shareholders before compensation grows too much.

Shareholders may want to check for free if Mediclinic International insiders are buying or selling shares.

Switching gears from Mediclinic International, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.