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It's Probably Less Likely That AdAlta Limited's (ASX:1AD) CEO Will See A Huge Pay Rise This Year

Key Insights

  • AdAlta's Annual General Meeting to take place on 22nd of November

  • Salary of AU$324.9k is part of CEO Tim Oldham's total remuneration

  • The overall pay is comparable to the industry average

  • AdAlta's EPS grew by 24% over the past three years while total shareholder loss over the past three years was 83%

The underwhelming share price performance of AdAlta Limited (ASX:1AD) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 22nd of November could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for AdAlta

Comparing AdAlta Limited's CEO Compensation With The Industry

At the time of writing, our data shows that AdAlta Limited has a market capitalization of AU$8.4m, and reported total annual CEO compensation of AU$440k for the year to June 2023. We note that's a decrease of 9.2% compared to last year. We note that the salary portion, which stands at AU$324.9k constitutes the majority of total compensation received by the CEO.

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On comparing similar-sized companies in the Australian Biotechs industry with market capitalizations below AU$306m, we found that the median total CEO compensation was AU$585k. From this we gather that Tim Oldham is paid around the median for CEOs in the industry.

Component

2023

2022

Proportion (2023)

Salary

AU$325k

AU$315k

74%

Other

AU$115k

AU$170k

26%

Total Compensation

AU$440k

AU$485k

100%

Speaking on an industry level, nearly 60% of total compensation represents salary, while the remainder of 40% is other remuneration. It's interesting to note that AdAlta pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
ceo-compensation

AdAlta Limited's Growth

AdAlta Limited has seen its earnings per share (EPS) increase by 24% a year over the past three years. In the last year, its revenue is up 26%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has AdAlta Limited Been A Good Investment?

With a total shareholder return of -83% over three years, AdAlta Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 6 warning signs for AdAlta (3 are a bit concerning!) that you should be aware of before investing here.

Switching gears from AdAlta, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.