Geoffrey Kempler became the CEO of Alterity Therapeutics Limited (ASX:ATH) in 2005. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Geoffrey Kempler’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Alterity Therapeutics Limited has a market cap of AU$26m, and is paying total annual CEO compensation of AU$644k. (This number is for the twelve months until June 2018). We think total compensation is more important but we note that the CEO salary is lower, at AU$381k. We examined a group of similar sized companies, with market capitalizations of below AU$296m. The median CEO total compensation in that group is AU$355k.
Thus we can conclude that Geoffrey Kempler receives more in total compensation than the median of a group of companies in the same market, and of similar size to Alterity Therapeutics Limited. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Alterity Therapeutics, below.
Is Alterity Therapeutics Limited Growing?
On average over the last three years, Alterity Therapeutics Limited has shrunk earnings per share by 5.5% each year (measured with a line of best fit). In the last year, its revenue is up 59%.
The reduction in earnings per share, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can’t form a strong opinion about business performance yet; but it’s one worth watching.
Has Alterity Therapeutics Limited Been A Good Investment?
With a three year total loss of 73%, Alterity Therapeutics Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at Alterity Therapeutics Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Although we’d stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. So you may want to check if insiders are buying Alterity Therapeutics shares with their own money (free access).
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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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.