This article will reflect on the compensation paid to Robert Read who has served as CEO of MedAdvisor Limited (ASX:MDR) since 2015. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing MedAdvisor Limited's CEO Compensation With the industry
At the time of writing, our data shows that MedAdvisor Limited has a market capitalization of AU$96m, and reported total annual CEO compensation of AU$461k for the year to June 2020. Notably, that's an increase of 46% over the year before. Notably, the salary which is AU$292.1k, represents most of the total compensation being paid.
For comparison, other companies in the industry with market capitalizations below AU$282m, reported a median total CEO compensation of AU$498k. From this we gather that Robert Read is paid around the median for CEOs in the industry. What's more, Robert Read holds AU$1.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. There isn't a significant difference between MedAdvisor and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at MedAdvisor Limited's Growth Numbers
MedAdvisor Limited has reduced its earnings per share by 21% a year over the last three years. Its revenue is up 16% over the last year.
Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has MedAdvisor Limited Been A Good Investment?
Most shareholders would probably be pleased with MedAdvisor Limited for providing a total return of 63% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
As we noted earlier, MedAdvisor pays its CEO in line with similar-sized companies belonging to the same industry. Investors will be happy that MedAdvisor has produced strong shareholder returns for the past three years. At the same time, revenues are also moving northwards at a healthy pace. However, on a concerning note, EPS is not growing. Considering overall performance, it's fair to say Robert is paid reasonably.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for MedAdvisor (1 doesn't sit too well with us!) that you should be aware of before investing here.
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.
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.
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