Should Shareholders Reconsider LBT Innovations Limited's (ASX:LBT) CEO Compensation Package?

Key Insights

• LBT Innovations to hold its Annual General Meeting on 29th of November
• Salary of AU$302.0k is part of CEO Brent Barnes's total remuneration
• The total compensation is similar to the average for the industry
• LBT Innovations' EPS declined by 26% over the past three years while total shareholder loss over the past three years was 94%

LBT Innovations Limited (ASX:LBT) has not performed well recently and CEO Brent Barnes will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 29th of November. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See 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$5.8m, and paid its CEO total annual compensation worth AU$477k over the year to June 2023. That's a notable decrease of 9.7% on last year. In particular, the salary of AU$302.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Australian Medical Equipment industry with market capitalizations under AU$306m, the reported median total CEO compensation was AU$522k. So it looks like LBT Innovations compensates Brent Barnes in line with the median for the industry. What's more, Brent Barnes holds AU$261k worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	AU$302k	AU$317k	63%
Other	AU$175k	AU$211k	37%
Total Compensation	AU$477k	AU$528k	100%

On an industry level, around 62% of total compensation represents salary and 38% is other remuneration. Although there is a difference in how total compensation is set, LBT Innovations more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

LBT Innovations Limited's Growth

Over the last three years, LBT Innovations Limited has shrunk its earnings per share by 26% per year. Revenue was pretty flat on last year.

Overall this is not a very positive result for shareholders. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has LBT Innovations Limited Been A Good Investment?

The return of -94% over three years would not have pleased LBT Innovations Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 6 warning signs for LBT Innovations (5 don't sit too well with us!) that you should be aware of before investing here.

Important note: LBT Innovations is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.