Roger Aston became the CEO ofPharmAust Limited(ASX
AA) 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 PharmAust pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for PharmAust
Comparing PharmAust Limited’s CEO Compensation With the industry
At the time of writing, our data shows that PharmAust Limited has a market capitalization of AU$36m, and reported total annual CEO compensation of AU$285k for the year to June 2020. This means that the compensation hasn’t changed much from last year. In particular, the salary of AU$260.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below AU$284m, reported a median total CEO compensation of AU$440k. In other words, PharmAust pays its CEO lower than the industry median. Moreover, Roger Aston also holds AU$1.7m worth of PharmAust stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) | |
| 1 | Salary | AU$260k | AU$260k | 91% |
| 2 | Other | AU$25k | AU$25k | 9% |
| 3 | Total Compensation | AU$285k | AU$285k | 100% |
On an industry level, roughly 62% of total compensation represents salary and 38% is other remuneration. It’s interesting to note that PharmAust pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion – which is generally tied to performance, is lower.
ASXAA CEO Compensation November 2nd 2020PharmAust Limited’s Growth
Over the past three years, PharmAust Limited has seen its earnings per share (EPS) grow by 35% per year. In the last year, its revenue is down 5.2%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s always a tough situation when revenues are not growing, but ultimately profits are more important. We don’t have analyst forecasts, but you could get a better understanding of its growth by checking outthis more detailed historical graphof earnings, revenue and cash flow.
Has PharmAust Limited Been A Good Investment?
Boasting a total shareholder return of 139% over three years, PharmAust Limited has done well by shareholders. 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.
In Summary…
As we noted earlier, PharmAust pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Since EPS growth is heading in a positive direction; many would agree with our assessment that the pay is modest. Given the strong history of shareholder returns, the shareholders are probably very happy with Roger’s performance.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That’s why we did some digging and identified4 warning signs for PharmAustthat investors should think about before committing capital to this stock.
