Sam Hupert has been the CEO of Pro Medicus Limited (ASX:PME) since 2010, and this article will examine the executive's compensation with respect to the overall performance of the company. 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 Pro Medicus
Comparing Pro Medicus Limited's CEO Compensation With the industry
Our data indicates that Pro Medicus Limited has a market capitalization of AU$3.3b, and total annual CEO compensation was reported as AU$508k for the year to June 2020. That is, the compensation was roughly the same as last year. Notably, the salary which is AU$475.0k, represents most of the total compensation being paid.
On comparing similar companies from the same industry with market caps ranging from AU$2.6b to AU$8.3b, we found that the median CEO total compensation was AU$3.8m. This suggests that Sam Hupert is paid below the industry median. Moreover, Sam Hupert also holds AU$895m worth of Pro Medicus stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$475k | AU$475k | 94% |
| Other | AU$33k | AU$33k | 6% |
| Total Compensation | AU$508k | AU$508k | 100% |
On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. It's interesting to note that Pro Medicus pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Pro Medicus Limited's Growth Numbers
Over the past three years, Pro Medicus Limited has seen its earnings per share (EPS) grow by 35% per year. It achieved revenue growth of 13% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Pro Medicus Limited Been A Good Investment?
We think that the total shareholder return of 285%, over three years, would leave most Pro Medicus Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
As we noted earlier, Pro Medicus pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Since EPS growth is heading in a positive direction; many would agree with our assessment that the pay is modest. Given the strong history of shareholder returns, the shareholders are probably very happy with Sam's performance.
CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Pro Medicus (free visualization of insider trades).
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. 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:PME
Pro Medicus
A healthcare informatics company, engages in the development and supply of healthcare imaging software, and radiology information (RIS) system software and services to hospitals, imaging centers, and health care groups in Australia, North America, and Europe.
Flawless balance sheet with solid track record.
