Brent Barnes became the CEO of LBT Innovations Limited (ASX:LBT) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for LBT Innovations
How Does Total Compensation For Brent Barnes Compare With Other Companies In The Industry?
According to our data, LBT Innovations Limited has a market capitalization of AU$35m, and paid its CEO total annual compensation worth AU$420k over the year to June 2020. That's just a smallish increase of 4.7% on last year. Notably, the salary which is AU$338.0k, represents most of the total compensation being paid.
On comparing similar-sized companies in the industry with market capitalizations below AU$260m, we found that the median total CEO compensation was AU$590k. So it looks like LBT Innovations compensates Brent Barnes in line with the median for the industry. What's more, Brent Barnes holds AU$148k worth of shares in the company in their own name.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$338k | AU$288k | 80% |
| Other | AU$82k | AU$113k | 20% |
| Total Compensation | AU$420k | AU$401k | 100% |
On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. LBT Innovations is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
LBT Innovations Limited's Growth
LBT Innovations Limited's earnings per share (EPS) grew 19% per year over the last three years. In the last year, the company lost virtually all of its revenue.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has LBT Innovations Limited Been A Good Investment?
With a three year total loss of 45% for the shareholders, LBT Innovations Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
As we touched on above, LBT Innovations Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, the company has logged negative shareholder returns over the previous three years. However, EPS growth is positive over the same time frame. It's tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 5 warning signs for LBT Innovations (of which 2 are a bit concerning!) 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:LBT
Clever Culture Systems
LBT Innovations Limited engages in the research, development, and commercialization of technology solutions for medical industry in Australia, the United States, Sweden, the United Kingdom, and Germany.
Medium-low with mediocre balance sheet.
