Yahoo Finance Shareholders May Be More Conservative With Capitol Health Limited's (ASX:CAJ) CEO Compensation For Now
Capitol Health Limited (ASX:CAJ) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 15 November 2022. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
View our latest analysis for Capitol Health
Comparing Capitol Health Limited's CEO Compensation With The Industry
According to our data, Capitol Health Limited has a market capitalization of AU$340m, and paid its CEO total annual compensation worth AU$1.4m over the year to June 2022. Notably, that's a decrease of 8.4% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$670k.
For comparison, other companies in the same industry with market capitalizations ranging between AU$155m and AU$619m had a median total CEO compensation of AU$1.0m. Hence, we can conclude that Justin Walter is remunerated higher than the industry median. What's more, Justin Walter holds AU$763k worth of shares in the company in their own name.
Component | 2022 | 2021 | Proportion (2022) |
Salary | AU$670k | AU$673k | 48% |
Other | AU$724k | AU$848k | 52% |
Total Compensation | AU$1.4m | AU$1.5m | 100% |
On an industry level, roughly 55% of total compensation represents salary and 45% is other remuneration. Capitol Health pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Capitol Health Limited's Growth
Capitol Health Limited has reduced its earnings per share by 31% a year over the last three years. Its revenue is up 3.5% over the last year.
Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Capitol Health Limited Been A Good Investment?
We think that the total shareholder return of 43%, over three years, would leave most Capitol Health Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
To Conclude...
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Capitol Health that investors should think about before committing capital to this stock.
Switching gears from Capitol Health, 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.
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