This article will reflect on the compensation paid to John Melki who has served as CEO of Genetic Signatures Limited (ASX:GSS) since 2011. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for Genetic Signatures
How Does Total Compensation For John Melki Compare With Other Companies In The Industry?
Our data indicates that Genetic Signatures Limited has a market capitalization of AU$281m, and total annual CEO compensation was reported as AU$564k for the year to June 2020. We note that's an increase of 44% above last year. In particular, the salary of AU$308.1k, 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$130m and AU$518m, we discovered that the median CEO total compensation of that group was AU$564k. This suggests that Genetic Signatures remunerates its CEO largely in line with the industry average. Moreover, John Melki also holds AU$2.2m worth of Genetic Signatures stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$308k | AU$292k | 55% |
| Other | AU$256k | AU$99k | 45% |
| Total Compensation | AU$564k | AU$390k | 100% |
Talking in terms of the industry, salary represented approximately 77% of total compensation out of all the companies we analyzed, while other remuneration made up 23% of the pie. It's interesting to note that Genetic Signatures allocates a smaller portion of compensation to salary in comparison to the broader 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.
Genetic Signatures Limited's Growth
Genetic Signatures Limited has seen its earnings per share (EPS) increase by 1.6% a year over the past three years. Its revenue is up 98% over the last year.
It's great to see that revenue growth is strong. Combined with modest EPS growth, we get a good impression of the company. So while we'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! 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 Genetic Signatures Limited Been A Good Investment?
Boasting a total shareholder return of 497% over three years, Genetic Signatures Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
As we noted earlier, Genetic Signatures pays its CEO in line with similar-sized companies belonging to the same industry. However, the company's EPS growth numbers over the last three years is not that impressive. At the same time, shareholder returns have remained strong over the same period. We would like to see EPS growth from the business, although we wouldn't say the CEO compensation is high.
Whatever your view on compensation, you might want to check if insiders are buying or selling Genetic Signatures shares (free trial).
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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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About ASX:GSS
Genetic Signatures
Operates as a molecular diagnostic company in Australia, the Asia Pacific, Europe, the Middle East, Asia, and the Americas.
Exceptional growth potential with excellent balance sheet.
