Yahoo Finance What Did Nanosonics' (ASX:NAN) CEO Take Home Last Year?
This article will reflect on the compensation paid to Michael Kavanagh who has served as CEO of Nanosonics Limited (ASX:NAN) since 2013. This analysis will also assess whether Nanosonics pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for Nanosonics
How Does Total Compensation For Michael Kavanagh Compare With Other Companies In The Industry?
At the time of writing, our data shows that Nanosonics Limited has a market capitalization of AU$2.0b, and reported total annual CEO compensation of AU$1.4m for the year to June 2020. We note that's an increase of 20% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$652k.
On comparing similar companies from the same industry with market caps ranging from AU$1.4b to AU$4.4b, we found that the median CEO total compensation was AU$2.3m. In other words, Nanosonics pays its CEO lower than the industry median. Moreover, Michael Kavanagh also holds AU$6.6m worth of Nanosonics 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) |
Salary | AU$652k | AU$579k | 47% |
Other | AU$742k | AU$585k | 53% |
Total Compensation | AU$1.4m | AU$1.2m | 100% |
Talking in terms of the industry, salary represented approximately 61% of total compensation out of all the companies we analyzed, while other remuneration made up 39% of the pie. In Nanosonics' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Nanosonics Limited's Growth Numbers
Over the last three years, Nanosonics Limited has shrunk its earnings per share by 27% per year. In the last year, its revenue is up 19%.
The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Nanosonics Limited Been A Good Investment?
We think that the total shareholder return of 152%, over three years, would leave most Nanosonics Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
As we touched on above, Nanosonics Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Meanwhile, shareholder returns and revenues are growing at a good clip. However, EPS growth has been negative during this time. But all things considered, we believe shareholders will be happy with the performance, and that's why CEO compensation is appropriate in our opinion.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Nanosonics that investors should think about before committing capital to this stock.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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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