This article will reflect on the compensation paid to Alumootil Cherian who has served as CEO of Global Health Limited (ASX:GLH) since 2002. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Global Health.
Check out our latest analysis for Global Health
How Does Total Compensation For Alumootil Cherian Compare With Other Companies In The Industry?
At the time of writing, our data shows that Global Health Limited has a market capitalization of AU$18m, and reported total annual CEO compensation of AU$286k for the year to June 2020. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at AU$212.4k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$265m, the reported median total CEO compensation was AU$460k. Accordingly, Global Health pays its CEO under the industry median. Moreover, Alumootil Cherian also holds AU$10m worth of Global Health stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$212k | AU$222k | 74% |
| Other | AU$74k | AU$70k | 26% |
| Total Compensation | AU$286k | AU$291k | 100% |
Talking in terms of the industry, salary represented approximately 70% of total compensation out of all the companies we analyzed, while other remuneration made up 30% of the pie. There isn't a significant difference between Global Health and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Global Health Limited's Growth Numbers
Global Health Limited's earnings per share (EPS) grew 2.4% per year over the last three years. It achieved revenue growth of 13% over the last year.
We think the revenue growth is good. 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Global Health Limited Been A Good Investment?
Boasting a total shareholder return of 85% over three years, Global Health Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
To Conclude...
As we noted earlier, Global Health pays its CEO lower than the norm for similar-sized companies belonging to the same industry. In contrast, shareholder returns have been excellent over the past three years, and that’s certainly a promising trend to keep an eye on. Considering this fine result for investors, we believe CEO compensation to be apt.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 5 warning signs for Global Health (of which 2 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.
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.
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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.
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About ASX:GLH
Global Health
Provides digital health solutions for the healthcare industry in Australia.
Low and slightly overvalued.
