Here's What We Think About Volpara Health Technologies' (ASX:VHT) CEO Pay

Ralph Highnam is the CEO of Volpara Health Technologies Limited (ASX:VHT), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether Volpara Health Technologies pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Volpara Health Technologies

Comparing Volpara Health Technologies Limited's CEO Compensation With the industry

At the time of writing, our data shows that Volpara Health Technologies Limited has a market capitalization of AU$345m, and reported total annual CEO compensation of NZ$395k for the year to March 2020. We note that's a small decrease of 6.4% on last year. Notably, the salary which is NZ$323.7k, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from AU$137m to AU$547m, we found that the median CEO total compensation was NZ$727k. This suggests that Ralph Highnam is paid below the industry median. What's more, Ralph Highnam holds AU$22m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 70% of total compensation represents salary and 30% is other remuneration. According to our research, Volpara Health Technologies has allocated a higher percentage of pay to salary in comparison to the wider 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.

Volpara Health Technologies Limited's Growth

Over the last three years, Volpara Health Technologies Limited has shrunk its earnings per share by 9.7% per year. It achieved revenue growth of 151% over the last year.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. 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 Volpara Health Technologies Limited Been A Good Investment?

We think that the total shareholder return of 94%, over three years, would leave most Volpara Health Technologies Limited shareholders smiling. 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.

To Conclude...

As previously discussed, Ralph is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Meanwhile, shareholder returns and revenues are growing at a good clip. But it's noteworthy that EPS growth is in the red during the same time frame. But all things considered, we believe shareholders will be happy with the performance, and that's why CEO compensation is appropriate in our opinion.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for Volpara Health Technologies that investors should look into moving forward.

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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