Stock Analysis

We Think Some Shareholders May Hesitate To Increase Cogstate Limited's (ASX:CGS) CEO Compensation

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Performance at Cogstate Limited (ASX:CGS) has been reasonably good and CEO Brad O'Connor has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 27 October 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for Cogstate

Comparing Cogstate Limited's CEO Compensation With the industry

According to our data, Cogstate Limited has a market capitalization of AU$387m, and paid its CEO total annual compensation worth US$1.1m over the year to June 2021. Notably, that's an increase of 16% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$344k.

On examining similar-sized companies in the industry with market capitalizations between AU$134m and AU$535m, we discovered that the median CEO total compensation of that group was US$474k. Accordingly, our analysis reveals that Cogstate Limited pays Brad O'Connor north of the industry median. What's more, Brad O'Connor holds AU$9.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20212020Proportion (2021)
Salary US$344k US$371k 32%
Other US$732k US$559k 68%
Total CompensationUS$1.1m US$931k100%

On an industry level, roughly 57% of total compensation represents salary and 43% is other remuneration. Cogstate pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ASX:CGS CEO Compensation October 20th 2021

Cogstate Limited's Growth

Cogstate Limited's earnings per share (EPS) grew 70% per year over the last three years. Its revenue is up 44% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Cogstate Limited Been A Good Investment?

Boasting a total shareholder return of 277% over three years, Cogstate 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. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for Cogstate that investors should be aware of in a dynamic business environment.

Important note: Cogstate 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.

Valuation is complex, but we're helping make it simple.

Find out whether Cogstate is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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