Is Living Cell Technologies Limited’s (ASX:LCT) CEO Pay Fair?
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Ken Taylor became the CEO of Living Cell Technologies Limited (ASX:LCT) in 2014. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Living Cell Technologies
How Does Ken Taylor’s Compensation Compare With Similar Sized Companies?
Our data indicates that Living Cell Technologies Limited is worth AU$22m, and total annual CEO compensation is AU$393k. (This number is for the twelve months until 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$361k. We examined a group of similar sized companies, with market capitalizations of below AU$282m. The median CEO compensation in that group is AU$363k.
So Ken Taylor is paid around the average of the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.
The graphic below shows how CEO compensation at Living Cell Technologies has changed from year to year.
Is Living Cell Technologies Limited Growing?
Over the last three years Living Cell Technologies Limited has grown its earnings per share (EPS) by an average of 52% per year (using a line of best fit). It saw its revenue drop -25% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. We don’t have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Living Cell Technologies Limited Been A Good Investment?
Given the total loss of 36% over three years, many shareholders in Living Cell Technologies Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
In Summary…
Ken Taylor is paid around the same as most CEOs of similar size companies.
We think that the EPS growth is very pleasing, but we cannot say the same about the lacklustre shareholder returns (over the last three years). Considering the improvement in earnings per share, one could argue that the CEO pay is appropriate, albeit not too low. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Living Cell Technologies.
Important note: Living Cell Technologies may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.