How Does Resonance Health's (ASX:RHT) CEO Salary Compare to Peers?

This article will reflect on the compensation paid to Alison Laws who has served as CEO of Resonance Health Limited (ASX:RHT) since 2018. This analysis will also assess whether Resonance Health pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Resonance Health

Comparing Resonance Health Limited's CEO Compensation With the industry

Our data indicates that Resonance Health Limited has a market capitalization of AU$76m, and total annual CEO compensation was reported as AU$304k for the year to June 2020. We note that's an increase of 55% above last year. In particular, the salary of AU$250.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below AU$273m, reported a median total CEO compensation of AU$601k. In other words, Resonance Health pays its CEO lower than the industry median.

On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. Resonance Health pays out 82% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Resonance Health Limited's Growth

Over the last three years, Resonance Health Limited has shrunk its earnings per share by 13% per year. Its revenue is up 1.2% over the last year.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Resonance Health Limited Been A Good Investment?

Most shareholders would probably be pleased with Resonance Health Limited for providing a total return of 639% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

As previously discussed, Alison is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. And while EPS growth is in the red, shareholder returns have been great over the last three years, so that's certainly a bright spot! Although we'd like to see positive EPS growth, we'd argue the remuneration is modest, based on our observations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for Resonance Health that investors should think about before committing capital to this stock.

Important note: Resonance Health 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. 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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