Yahoo Finance Increases to CEO Compensation Might Be Put On Hold For Now at SomnoMed Limited (ASX:SOM)
Key Insights
SomnoMed to hold its Annual General Meeting on 24th of November
Total pay for CEO Neil Verdal-Austin includes AU$551.0k salary
The overall pay is 58% above the industry average
SomnoMed's three-year loss to shareholders was 78% while its EPS was down 71% over the past three years
Shareholders of SomnoMed Limited (ASX:SOM) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 24th of November will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's why we think shareholders should hold off on a raise for the CEO at the moment.
View our latest analysis for SomnoMed
How Does Total Compensation For Neil Verdal-Austin Compare With Other Companies In The Industry?
Our data indicates that SomnoMed Limited has a market capitalization of AU$50m, and total annual CEO compensation was reported as AU$817k for the year to June 2023. That's a notable decrease of 21% on last year. Notably, the salary which is AU$551.0k, represents most of the total compensation being paid.
For comparison, other companies in the Australian Medical Equipment industry with market capitalizations below AU$307m, reported a median total CEO compensation of AU$519k. This suggests that Neil Verdal-Austin is paid more than the median for the industry. Furthermore, Neil Verdal-Austin directly owns AU$805k worth of shares in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | AU$551k | AU$505k | 67% |
Other | AU$266k | AU$535k | 33% |
Total Compensation | AU$817k | AU$1.0m | 100% |
On an industry level, roughly 62% of total compensation represents salary and 38% is other remuneration. SomnoMed is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
SomnoMed Limited's Growth
SomnoMed Limited has reduced its earnings per share by 71% a year over the last three years. In the last year, its revenue is up 15%.
The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 SomnoMed Limited Been A Good Investment?
The return of -78% over three years would not have pleased SomnoMed Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 5 warning signs for SomnoMed you should be aware of, and 2 of them are concerning.
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.
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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.
