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We Think Some Shareholders May Hesitate To Increase Cogstate Limited's (ASX:CGS) CEO Compensation

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CEO Brad O'Connor has done a decent job of delivering relatively good performance at Cogstate Limited (ASX:CGS) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 27 October 2021. However, some shareholders will still be cautious of paying the CEO excessively.

See our latest analysis for Cogstate

Comparing Cogstate Limited's CEO Compensation With the industry

According to our data, Cogstate Limited has a market capitalization of AU$387m, and paid its CEO total annual compensation worth US$1.1m over the year to June 2021. That's a notable increase of 16% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$344k.

For comparison, other companies in the same industry with market capitalizations ranging between AU$134m and AU$535m had a median total CEO compensation of US$474k. Hence, we can conclude that Brad O'Connor is remunerated higher than the industry median. Moreover, Brad O'Connor also holds AU$9.8m worth of Cogstate stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2021

2020

Proportion (2021)

Salary

US$344k

US$371k

32%

Other

US$732k

US$559k

68%

Total Compensation

US$1.1m

US$931k

100%

Speaking on an industry level, nearly 57% of total compensation represents salary, while the remainder of 43% is other remuneration. Cogstate sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

Cogstate Limited's Growth

Over the past three years, Cogstate Limited has seen its earnings per share (EPS) grow by 70% per year. In the last year, its revenue is up 44%.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Cogstate Limited Been A Good Investment?

Boasting a total shareholder return of 277% over three years, Cogstate Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

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 3 warning signs for Cogstate that investors should think about before committing capital to this stock.

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. 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.

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

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