Shareholders Would Not Be Objecting To Integral Diagnostics Limited's (ASX:IDX) CEO Compensation And Here's Why

By
Simply Wall St
Published
October 29, 2021
ASX:IDX
Source: Shutterstock

The performance at Integral Diagnostics Limited (ASX:IDX) has been quite strong recently and CEO Ian Kadish has played a role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 04 November 2021. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

View our latest analysis for Integral Diagnostics

Comparing Integral Diagnostics Limited's CEO Compensation With the industry

Our data indicates that Integral Diagnostics Limited has a market capitalization of AU$941m, and total annual CEO compensation was reported as AU$1.5m for the year to June 2021. That's a notable increase of 28% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$736k.

On examining similar-sized companies in the industry with market capitalizations between AU$533m and AU$2.1b, we discovered that the median CEO total compensation of that group was AU$1.4m. This suggests that Integral Diagnostics remunerates its CEO largely in line with the industry average. Furthermore, Ian Kadish directly owns AU$2.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20212020Proportion (2021)
Salary AU$736k AU$635k 48%
Other AU$811k AU$577k 52%
Total CompensationAU$1.5m AU$1.2m100%

Speaking on an industry level, nearly 58% of total compensation represents salary, while the remainder of 42% is other remuneration. In Integral Diagnostics' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ASX:IDX CEO Compensation October 29th 2021

A Look at Integral Diagnostics Limited's Growth Numbers

Over the past three years, Integral Diagnostics Limited has seen its earnings per share (EPS) grow by 15% per year. It achieved revenue growth of 27% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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?

Most shareholders would probably be pleased with Integral Diagnostics Limited for providing a total return of 82% over three years. 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 in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. 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.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for Integral Diagnostics that investors should be aware of in a dynamic business environment.

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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