The CEO of CannPal Animal Therapeutics Limited (ASX:CP1) is Layton Mills, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing CannPal Animal Therapeutics Limited's CEO Compensation With the industry
According to our data, CannPal Animal Therapeutics Limited has a market capitalization of AU$9.8m, and paid its CEO total annual compensation worth AU$244k over the year to June 2020. That's just a smallish increase of 3.4% on last year. In particular, the salary of AU$198.8k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under AU$275m, the reported median total CEO compensation was AU$414k. That is to say, Layton Mills is paid under the industry median. Moreover, Layton Mills also holds AU$815k worth of CannPal Animal Therapeutics stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 66% of total compensation represents salary and 34% is other remuneration. CannPal Animal Therapeutics is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at CannPal Animal Therapeutics Limited's Growth Numbers
Over the past three years, CannPal Animal Therapeutics Limited has seen its earnings per share (EPS) grow by 31% per year. In the last year, its revenue is up 135%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has CannPal Animal Therapeutics Limited Been A Good Investment?
With a three year total loss of 43% for the shareholders, CannPal Animal Therapeutics Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we touched on above, CannPal Animal Therapeutics Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, the EPS growth over three years is certainly impressive. Considering EPS are on the up, we would say Layton is compensated fairly. Shareholders, though, would ideally like to see shareholder returns head north before they agree to any raise.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 3 warning signs for CannPal Animal Therapeutics (2 are concerning!) that you should be aware of before investing here.
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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