Stock Analysis

Regis Healthcare Limited's (ASX:REG) CEO Compensation Looks Acceptable To Us And Here's Why

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Key Insights

  • Regis Healthcare will host its Annual General Meeting on 23rd of October
  • CEO Linda Mellors' total compensation includes salary of AU$754.3k
  • The total compensation is similar to the average for the industry
  • Over the past three years, Regis Healthcare's EPS fell by 90% and over the past three years, the total shareholder return was 190%

Despite strong share price growth of 190% for Regis Healthcare Limited (ASX:REG) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 23rd of October may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for Regis Healthcare

Comparing Regis Healthcare Limited's CEO Compensation With The Industry

According to our data, Regis Healthcare Limited has a market capitalization of AU$753m, and paid its CEO total annual compensation worth AU$1.3m over the year to June 2023. We note that's an increase of 32% above last year. In particular, the salary of AU$754.3k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Australian Healthcare industry with market caps ranging from AU$314m to AU$1.3b, we found that the median CEO total compensation was AU$1.2m. This suggests that Regis Healthcare remunerates its CEO largely in line with the industry average. Furthermore, Linda Mellors directly owns AU$533k worth of shares in the company.

Component20232022Proportion (2023)
Salary AU$754k AU$711k 60%
Other AU$503k AU$241k 40%
Total CompensationAU$1.3m AU$952k100%

On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. There isn't a significant difference between Regis Healthcare and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ASX:REG CEO Compensation October 18th 2023

A Look at Regis Healthcare Limited's Growth Numbers

Over the last three years, Regis Healthcare Limited has shrunk its earnings per share by 90% per year. Its revenue is up 7.6% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Regis Healthcare Limited Been A Good Investment?

Boasting a total shareholder return of 190% over three years, Regis Healthcare 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.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Regis Healthcare that investors should be aware of in a dynamic business environment.

Important note: Regis Healthcare 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.

Valuation is complex, but we're helping make it simple.

Find out whether Regis Healthcare is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.