Yahoo Finance How Is Ovato's (ASX:OVT) CEO Compensated?
Kevin Slaven became the CEO of Ovato Limited (ASX:OVT) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Ovato pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Ovato
Comparing Ovato Limited's CEO Compensation With the industry
Our data indicates that Ovato Limited has a market capitalization of AU$52m, and total annual CEO compensation was reported as AU$600k for the year to June 2020. That's a notable decrease of 13% on last year. In particular, the salary of AU$569.0k, 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$257m, the reported median total CEO compensation was AU$330k. Accordingly, our analysis reveals that Ovato Limited pays Kevin Slaven north of the industry median.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$569k | AU$667k | 95% |
Other | AU$31k | AU$25k | 5% |
Total Compensation | AU$600k | AU$692k | 100% |
Speaking on an industry level, nearly 71% of total compensation represents salary, while the remainder of 29% is other remuneration. According to our research, Ovato has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Ovato Limited's Growth
Ovato Limited has seen its earnings per share (EPS) increase by 12% a year over the past three years. Its revenue is down 21% over the previous year.
Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Ovato Limited Been A Good Investment?
Since shareholders would have lost about 95% over three years, some Ovato Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
As previously discussed, Kevin is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth is certainly impressive, but shareholder returns — over the same period — have been disappointing. Considering overall performance, we can't say Kevin is underpaid, in fact compensation is definitely on the higher side.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for Ovato (2 are significant!) 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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