PolyNovo Limited's (ASX:PNV) CEO Compensation Looks Acceptable To Us And Here's Why

CEO Paul Brennan has done a decent job of delivering relatively good performance at PolyNovo Limited (ASX:PNV) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 26 October 2021. We present our case of why we think CEO compensation looks fair.

Check out our latest analysis for PolyNovo

Comparing PolyNovo Limited's CEO Compensation With the industry

According to our data, PolyNovo Limited has a market capitalization of AU$1.2b, and paid its CEO total annual compensation worth AU$2.6m over the year to June 2021. That's a notable increase of 23% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$397k.

For comparison, other companies in the same industry with market capitalizations ranging between AU$540m and AU$2.2b had a median total CEO compensation of AU$2.5m. So it looks like PolyNovo compensates Paul Brennan in line with the median for the industry. Furthermore, Paul Brennan directly owns AU$17m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	AU$397k	AU$360k	15%
Other	AU$2.2m	AU$1.8m	85%
Total Compensation	AU$2.6m	AU$2.1m	100%

Speaking on an industry level, nearly 54% of total compensation represents salary, while the remainder of 46% is other remuneration. PolyNovo 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.

PolyNovo Limited's Growth

PolyNovo Limited's earnings per share (EPS) grew 2.6% per year over the last three years. Its revenue is up 31% over the last year.

It's great to see that revenue growth is strong. With that in mind, the modestly improving EPS seems positive. We'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has PolyNovo Limited Been A Good Investment?

Boasting a total shareholder return of 219% over three years, PolyNovo Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

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. That's why we did some digging and identified 1 warning sign for PolyNovo that you should be aware of before investing.

Switching gears from PolyNovo, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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