We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Oventus Medical Limited's (ASX:OVN) CEO For Now

Shareholders of Oventus Medical Limited (ASX:OVN) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also lacking, despite revenue growth. Shareholders will have a chance to take their concerns to the board at the next AGM on 18 November 2021 and vote on resolutions including executive compensation, which studies show may have an impact on company performance. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

View our latest analysis for Oventus Medical

How Does Total Compensation For Chris Hart Compare With Other Companies In The Industry?

According to our data, Oventus Medical Limited has a market capitalization of AU$24m, and paid its CEO total annual compensation worth AU$1.8m over the year to June 2021. We note that's an increase of 92% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$567k.

In comparison with other companies in the industry with market capitalizations under AU$272m, the reported median total CEO compensation was AU$656k. This suggests that Chris Hart is paid more than the median for the industry. Furthermore, Chris Hart directly owns AU$2.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	AU$567k	AU$512k	31%
Other	AU$1.2m	AU$429k	69%
Total Compensation	AU$1.8m	AU$941k	100%

On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. Oventus Medical sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Oventus Medical Limited's Growth Numbers

Over the last three years, Oventus Medical Limited has shrunk its earnings per share by 1.4% per year. Its revenue is up 160% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. 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 Oventus Medical Limited Been A Good Investment?

Few Oventus Medical Limited shareholders would feel satisfied with the return of -67% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 5 warning signs for Oventus Medical you should be aware of, and 3 of them make us uncomfortable.

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.

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.

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