Here's Why We Think Apiam Animal Health Limited's (ASX:AHX) CEO Compensation Looks Fair for the time being

Under the guidance of CEO Chris Richards, Apiam Animal Health Limited (ASX:AHX) has performed reasonably well recently. As shareholders go into the upcoming AGM on 25 November 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. We present our case of why we think CEO compensation looks fair.

View our latest analysis for Apiam Animal Health

How Does Total Compensation For Chris Richards Compare With Other Companies In The Industry?

Our data indicates that Apiam Animal Health Limited has a market capitalization of AU$125m, and total annual CEO compensation was reported as AU$455k for the year to June 2021. We note that's an increase of 13% above last year. In particular, the salary of AU$360.9k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$275m, we found that the median total CEO compensation was AU$423k. This suggests that Apiam Animal Health remunerates its CEO largely in line with the industry average. What's more, Chris Richards holds AU$29m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	AU$361k	AU$355k	79%
Other	AU$94k	AU$47k	21%
Total Compensation	AU$455k	AU$401k	100%

On an industry level, roughly 55% of total compensation represents salary and 45% is other remuneration. According to our research, Apiam Animal Health has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Apiam Animal Health Limited's Growth Numbers

Over the past three years, Apiam Animal Health Limited has seen its earnings per share (EPS) grow by 5.3% per year. It achieved revenue growth of 6.6% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but we're happy with the modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Apiam Animal Health Limited Been A Good Investment?

Boasting a total shareholder return of 99% over three years, Apiam Animal Health Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

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. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 4 warning signs for Apiam Animal Health that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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