This Is Why We Think Sonic Healthcare Limited's (ASX:SHL) CEO Might Get A Pay Rise Approved By Shareholders
Shareholders will be pleased by the robust performance of Sonic Healthcare Limited (ASX:SHL) recently and this will be kept in mind in the upcoming AGM on 16 November 2022. This would also be a chance for them to hear the board review the financial results, discuss future company strategy to further improve the business and vote on any resolutions such as executive remuneration. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.
Check out our latest analysis for Sonic Healthcare
How Does Total Compensation For Colin Goldschmidt Compare With Other Companies In The Industry?
According to our data, Sonic Healthcare Limited has a market capitalization of AU$15b, and paid its CEO total annual compensation worth AU$7.7m over the year to June 2022. Notably, that's an increase of 14% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$2.4m.
For comparison, other companies in the industry with market capitalizations above AU$12b, reported a median total CEO compensation of AU$19m. This suggests that Colin Goldschmidt is paid below the industry median. What's more, Colin Goldschmidt holds AU$27m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2022 | 2021 | Proportion (2022) |
Salary | AU$2.4m | AU$2.4m | 31% |
Other | AU$5.3m | AU$4.4m | 69% |
Total Compensation | AU$7.7m | AU$6.7m | 100% |
Speaking on an industry level, nearly 55% of total compensation represents salary, while the remainder of 45% is other remuneration. Sonic Healthcare sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Sonic Healthcare Limited's Growth
Sonic Healthcare Limited has seen its earnings per share (EPS) increase by 36% a year over the past three years. Its revenue is up 6.7% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Sonic Healthcare Limited Been A Good Investment?
With a total shareholder return of 20% over three years, Sonic Healthcare Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
In Summary...
The company's overall performance, while not bad, could be better. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 2 warning signs for Sonic Healthcare (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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