Should You Worry About DIAGNOS Inc.’s (CVE:ADK) CEO Pay?

In 2004 André Larente was appointed CEO of DIAGNOS Inc. (CVE:ADK). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for DIAGNOS

How Does André Larente’s Compensation Compare With Similar Sized Companies?

Our data indicates that DIAGNOS Inc. is worth CA$11m, and total annual CEO compensation is CA$392k. (This figure is for the year to March 2018). While we always look at total compensation first, we note that the salary component is less, at CA$231k. We examined a group of similar sized companies, with market capitalizations of below CA$265m. The median CEO total compensation in that group is CA$133k.

It would therefore appear that DIAGNOS Inc. pays André Larente more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at DIAGNOS has changed from year to year.

TSXV:ADK CEO Compensation, August 13th 2019
TSXV:ADK CEO Compensation, August 13th 2019

Is DIAGNOS Inc. Growing?

On average over the last three years, DIAGNOS Inc. has grown earnings per share (EPS) by 9.6% each year (using a line of best fit). In the last year, its revenue is down -75%.

I generally like to see a little revenue growth, but the improvement in EPS is good. It’s hard to reach a conclusion about business performance right now. This may be one to watch.

Has DIAGNOS Inc. Been A Good Investment?

Given the total loss of 21% over three years, many shareholders in DIAGNOS Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared the total CEO remuneration paid by DIAGNOS Inc., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Although we’d stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling DIAGNOS (free visualization of insider trades).

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.