How Does Australian Pharmaceutical Industries' (ASX:API) CEO Salary Compare to Peers?

By
Simply Wall St
Published
February 08, 2021
ASX:API
Source: Shutterstock

Richard Vincent became the CEO of Australian Pharmaceutical Industries Limited (ASX:API) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Australian Pharmaceutical Industries pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Australian Pharmaceutical Industries

How Does Total Compensation For Richard Vincent Compare With Other Companies In The Industry?

According to our data, Australian Pharmaceutical Industries Limited has a market capitalization of AU$626m, and paid its CEO total annual compensation worth AU$1.3m over the year to August 2020. Notably, that's an increase of 16% over the year before. We note that the salary portion, which stands at AU$1.10m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from AU$261m to AU$1.0b, we found that the median CEO total compensation was AU$752k. This suggests that Richard Vincent is paid more than the median for the industry. Furthermore, Richard Vincent directly owns AU$610k worth of shares in the company.

Component20202019Proportion (2020)
Salary AU$1.1m AU$1.1m 84%
Other AU$203k AU$49k 16%
Total CompensationAU$1.3m AU$1.1m100%

On an industry level, roughly 75% of total compensation represents salary and 25% is other remuneration. Australian Pharmaceutical Industries is paying a higher share of its remuneration through a salary in comparison to the overall industry. 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.

ceo-compensation
ASX:API CEO Compensation February 8th 2021

A Look at Australian Pharmaceutical Industries Limited's Growth Numbers

Australian Pharmaceutical Industries Limited has reduced its earnings per share by 22% a year over the last three years. In the last year, its revenue changed by just 0.2%.

Overall this is not a very positive result for shareholders. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Australian Pharmaceutical Industries Limited Been A Good Investment?

Australian Pharmaceutical Industries Limited has generated a total shareholder return of 0.8% over three years, so most shareholders wouldn't be too disappointed. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As we touched on above, Australian Pharmaceutical Industries Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, EPS has not grown in three years, failing to impress us. And while shareholder returns have been respectable, they have hardly been superb. So we think more research is needed, but we don't think the CEO is underpaid.

So you may want to check if insiders are buying Australian Pharmaceutical Industries shares with their own money (free access).

Important note: Australian Pharmaceutical Industries is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

If you decide to trade Australian Pharmaceutical Industries, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted


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. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020


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

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.


Simply Wall St character - Warren

Simply Wall St

Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.