4DMedical Limited's (ASX:4DX) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• 4DMedical to hold its Annual General Meeting on 1st of November
• Total pay for CEO Andreas Fouras includes AU$556.9k salary
• The total compensation is 70% higher than the average for the industry
• 4DMedical's three-year loss to shareholders was 80% while its EPS grew by 14% over the past three years

In the past three years, the share price of 4DMedical Limited (ASX:4DX) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 1st of November. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for 4DMedical

How Does Total Compensation For Andreas Fouras Compare With Other Companies In The Industry?

Our data indicates that 4DMedical Limited has a market capitalization of AU$163m, and total annual CEO compensation was reported as AU$988k for the year to June 2023. We note that's an increase of 20% above last year. We note that the salary of AU$556.9k makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar-sized companies in the Australian Healthcare Services industry with market capitalizations below AU$317m, we found that the median total CEO compensation was AU$583k. Hence, we can conclude that Andreas Fouras is remunerated higher than the industry median. Furthermore, Andreas Fouras directly owns AU$405k worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	AU$557k	AU$519k	56%
Other	AU$431k	AU$301k	44%
Total Compensation	AU$988k	AU$821k	100%

Speaking on an industry level, nearly 57% of total compensation represents salary, while the remainder of 43% is other remuneration. Although there is a difference in how total compensation is set, 4DMedical more or less reflects the market in terms of setting the salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

4DMedical Limited's Growth

Over the past three years, 4DMedical Limited has seen its earnings per share (EPS) grow by 14% per year. Its revenue is down 32% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has 4DMedical Limited Been A Good Investment?

With a total shareholder return of -80% over three years, 4DMedical Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for 4DMedical (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the 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.

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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.