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Is PolyNovo Limited's (ASX:PNV) CEO Overpaid Relative To Its Peers?

Simply Wall St

Paul Brennan became the CEO of PolyNovo Limited (ASX:PNV) in 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for PolyNovo

How Does Paul Brennan's Compensation Compare With Similar Sized Companies?

Our data indicates that PolyNovo Limited is worth AU$1.5b, and total annual CEO compensation is AU$316k. (This number is for the twelve months until June 2019). That's below the compensation, last year. We think total compensation is more important but we note that the CEO salary is lower, at AU$265k. When we examined a selection of companies with market caps ranging from AU$585m to AU$2.3b, we found the median CEO total compensation was AU$1.5m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.

The graphic below shows how CEO compensation at PolyNovo has changed from year to year.

ASX:PNV CEO Compensation, September 19th 2019

Is PolyNovo Limited Growing?

Earnings per share at PolyNovo Limited are much the same as they were three years ago, albeit slightly lower, based on the trend. Its revenue is up 114% over last year.

The reduction in earnings per share, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. You might want to check this free visual report on analyst forecasts for future earnings.

Has PolyNovo Limited Been A Good Investment?

Most shareholders would probably be pleased with PolyNovo Limited for providing a total return of 744% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

It appears that PolyNovo Limited remunerates its CEO below most similar sized companies.

Paul Brennan is paid less than what is normal at similar size companies, and the total shareholder return has been pleasing over the last three years. We would like to see EPS growth, but in our view it seems the CEO is modestly remunerated. So you may want to check if insiders are buying PolyNovo shares with their own money (free access).

If you want to buy a stock that is better than PolyNovo, this free list of high return, low debt companies is a great place to look.

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 editorial-team@simplywallst.com. 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.