Yahoo Finance We Think The Compensation For Nanosonics Limited's (ASX:NAN) CEO Looks About Right
The performance at Nanosonics Limited (ASX:NAN) has been rather lacklustre of late and shareholders may be wondering what CEO Michael Kavanagh is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 18 November 2022. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We think CEO compensation looks appropriate given the data we have put together.
Check out our latest analysis for Nanosonics
Comparing Nanosonics Limited's CEO Compensation With The Industry
Our data indicates that Nanosonics Limited has a market capitalization of AU$1.3b, and total annual CEO compensation was reported as AU$1.4m for the year to June 2022. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$703k.
On examining similar-sized companies in the industry with market capitalizations between AU$620m and AU$2.5b, we discovered that the median CEO total compensation of that group was AU$2.5m. In other words, Nanosonics pays its CEO lower than the industry median. Furthermore, Michael Kavanagh directly owns AU$5.4m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2022 | 2021 | Proportion (2022) |
Salary | AU$703k | AU$642k | 49% |
Other | AU$728k | AU$781k | 51% |
Total Compensation | AU$1.4m | AU$1.4m | 100% |
Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. It's interesting to note that Nanosonics allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Nanosonics Limited's Growth Numbers
Over the last three years, Nanosonics Limited has shrunk its earnings per share by 35% per year. It achieved revenue growth of 17% over the last year.
The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Nanosonics Limited Been A Good Investment?
Few Nanosonics Limited shareholders would feel satisfied with the return of -41% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
The loss to shareholders over the past three years is certainly concerning. The fact that earnings growth has gone backwards could be a factor for the downward trend in the share price. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Nanosonics that investors should be aware of in a dynamic business environment.
Switching gears from Nanosonics, 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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