We Think Shareholders May Consider Being More Generous With Cochlear Limited's (ASX:COH) CEO Compensation Package

Key Insights

• Cochlear's Annual General Meeting to take place on 25th of October
• Total pay for CEO Dig Howitt includes AU$2.07m salary
• The total compensation is 59% less than the average for the industry
• Over the past three years, Cochlear's EPS grew by 3.4% and over the past three years, the total shareholder return was 34%

Shareholders will be pleased by the robust performance of Cochlear Limited (ASX:COH) recently and this will be kept in mind in the upcoming AGM on 25th of October. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

View our latest analysis for Cochlear

How Does Total Compensation For Dig Howitt Compare With Other Companies In The Industry?

At the time of writing, our data shows that Cochlear Limited has a market capitalization of AU$19b, and reported total annual CEO compensation of AU$6.4m for the year to June 2024. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$2.1m.

On comparing similar companies in the Australian Medical Equipment industry with market capitalizations above AU$12b, we found that the median total CEO compensation was AU$16m. Accordingly, Cochlear pays its CEO under the industry median. Furthermore, Dig Howitt directly owns AU$17m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	AU$2.1m	AU$2.0m	32%
Other	AU$4.4m	AU$4.3m	68%
Total Compensation	AU$6.4m	AU$6.3m	100%

Speaking on an industry level, nearly 57% of total compensation represents salary, while the remainder of 43% is other remuneration. Cochlear sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Cochlear Limited's Growth

Cochlear Limited's earnings per share (EPS) grew 3.4% per year over the last three years. In the last year, its revenue is up 15%.

We would argue that the modest growth in revenue is a notable positive. And the modest growth in EPS isn't bad, either. Although we'll stop short of calling the stock a top performer, we think the company has potential. 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 Cochlear Limited Been A Good Investment?

Boasting a total shareholder return of 34% over three years, Cochlear 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.

To Conclude...

Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Cochlear.

Switching gears from Cochlear, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.