The CEO of Sonic Healthcare Limited (ASX:SHL) is Colin Goldschmidt. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Colin Goldschmidt’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Sonic Healthcare Limited has a market cap of AU$13b, and is paying total annual CEO compensation of AU$5.1m. (This figure is for the year to June 2018). While we always look at total compensation first, we note that the salary component is less, at AU$2.4m. We examined companies with market caps from AU$5.9b to AU$18b, and discovered that the median CEO total compensation of that group was AU$4.1m.
That means Colin Goldschmidt receives fairly typical remuneration for the CEO of a company that size. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
The graphic below shows how CEO compensation at Sonic Healthcare has changed from year to year.
Is Sonic Healthcare Limited Growing?
Sonic Healthcare Limited has increased its earnings per share (EPS) by an average of 4.0% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 8.5%.
I’m not particularly impressed by the revenue growth, but I’m happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise.
Has Sonic Healthcare Limited Been A Good Investment?
Most shareholders would probably be pleased with Sonic Healthcare Limited for providing a total return of 40% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Colin Goldschmidt is paid around the same as most CEOs of similar size companies.
The company isn’t showing particularly great growth, but shareholder returns have been pleasing. So all things considered I’d venture that the CEO pay is appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Sonic Healthcare shares (free trial).
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.
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