We Think The Compensation For Advance NanoTek Limited's (ASX:ANO) CEO Looks About Right

Shareholders may be wondering what CEO Geoff Acton plans to do to improve the less than great performance at Advance NanoTek Limited (ASX:ANO) recently. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 05 November 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for Advance NanoTek

Comparing Advance NanoTek Limited's CEO Compensation With the industry

Our data indicates that Advance NanoTek Limited has a market capitalization of AU$215m, and total annual CEO compensation was reported as AU$246k for the year to June 2021. We note that's an increase of 33% above last year. In particular, the salary of AU$240.0k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between AU$133m and AU$533m, we discovered that the median CEO total compensation of that group was AU$538k. That is to say, Geoff Acton is paid under the industry median. Moreover, Geoff Acton also holds AU$1.3m worth of Advance NanoTek stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	AU$240k	AU$185k	97%
Other	AU$6.2k	-	3%
Total Compensation	AU$246k	AU$185k	100%

On an industry level, roughly 65% of total compensation represents salary and 35% is other remuneration. Advance NanoTek pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Advance NanoTek Limited's Growth Numbers

Advance NanoTek Limited has reduced its earnings per share by 78% a year over the last three years. It saw its revenue drop 60% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Advance NanoTek Limited Been A Good Investment?

We think that the total shareholder return of 296%, over three years, would leave most Advance NanoTek 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.

In Summary...

Advance NanoTek pays its CEO a majority of compensation through a salary. Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean these strong returns may not continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

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 2 warning signs for Advance NanoTek that you should be aware of before investing.

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.

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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