Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!
In 2016 Roby Zomer was appointed CEO of MGC Pharmaceuticals Limited (ASX:MXC). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Roby Zomer's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that MGC Pharmaceuticals Limited has a market cap of AU$44m, and is paying total annual CEO compensation of AU$498k. (This figure is for the year to June 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$334k. We took a group of companies with market capitalizations below AU$282m, and calculated the median CEO total compensation to be AU$357k.
It would therefore appear that MGC Pharmaceuticals Limited pays Roby Zomer more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at MGC Pharmaceuticals has changed from year to year.
Is MGC Pharmaceuticals Limited Growing?
Over the last three years MGC Pharmaceuticals Limited has grown its earnings per share (EPS) by an average of 33% per year (using a line of best fit). Its revenue is up 897% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.
Has MGC Pharmaceuticals Limited Been A Good Investment?
MGC Pharmaceuticals Limited has generated a total shareholder return of 13% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
We examined the amount MGC Pharmaceuticals Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. We also note that, over the same time frame, shareholder returns haven't been bad. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't call the CEO pay problematic. Whatever your view on compensation, you might want to check if insiders are buying or selling MGC Pharmaceuticals shares (free trial).
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.