Shareholders Will Probably Hold Off On Increasing Integral Diagnostics Limited's (ASX:IDX) CEO Compensation For The Time Being

Key Insights

• Integral Diagnostics will host its Annual General Meeting on 28th of November
• Total pay for CEO Ian Kadish includes AU$782.1k salary
• Total compensation is similar to the industry average
• Over the past three years, Integral Diagnostics' EPS fell by 4.8% and over the past three years, the total loss to shareholders 57%

The underwhelming share price performance of Integral Diagnostics Limited (ASX:IDX) in the past three years would have disappointed many shareholders. Per share earnings growth is also lacking, despite revenue growth. The AGM coming up on 28th of November will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

Check out our latest analysis for Integral Diagnostics

Comparing Integral Diagnostics Limited's CEO Compensation With The Industry

According to our data, Integral Diagnostics Limited has a market capitalization of AU$400m, and paid its CEO total annual compensation worth AU$1.1m over the year to June 2023. Notably, that's an increase of 40% over the year before. We note that the salary portion, which stands at AU$782.1k constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the Australian Healthcare industry with market capitalizations between AU$153m and AU$610m, we discovered that the median CEO total compensation of that group was AU$1.0m. From this we gather that Ian Kadish is paid around the median for CEOs in the industry. Moreover, Ian Kadish also holds AU$901k worth of Integral Diagnostics stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	AU$782k	AU$781k	71%
Other	AU$316k	-	29%
Total Compensation	AU$1.1m	AU$781k	100%

On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. According to our research, Integral Diagnostics has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Integral Diagnostics Limited's Growth

Integral Diagnostics Limited has reduced its earnings per share by 4.8% a year over the last three years. In the last year, its revenue is up 22%.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Integral Diagnostics Limited Been A Good Investment?

With a total shareholder return of -57% over three years, Integral Diagnostics Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which doesn't sit too well with us) in Integral Diagnostics we think you should know about.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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.