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In 2016 James Garner was appointed CEO of Kazia Therapeutics Limited (ASX:KZA). First, this article will compare CEO compensation with compensation at similar sized companies. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does James Garner’s Compensation Compare With Similar Sized Companies?
According to our data, Kazia Therapeutics Limited has a market capitalization of AU$25m, and pays its CEO total annual compensation worth AU$620k. (This is based on the year to June 2018). We think total compensation is more important but we note that the CEO salary is lower, at AU$425k. We examined a group of similar sized companies, with market capitalizations of below AU$288m. The median CEO total compensation in that group is AU$359k.
As you can see, James Garner is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Kazia Therapeutics Limited is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Kazia Therapeutics has changed from year to year.
Is Kazia Therapeutics Limited Growing?
Over the last three years Kazia Therapeutics Limited has grown its earnings per share (EPS) by an average of 19% per year (using a line of best fit). Its revenue is down -59% over last year.
This demonstrates that the company has been improving recently. A good result. While it would be good to see revenue growth, profits matter more in the end. You might want to check this free visual report on analyst forecasts for future earnings.
Has Kazia Therapeutics Limited Been A Good Investment?
Given the total loss of 65% over three years, many shareholders in Kazia Therapeutics Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount Kazia Therapeutics Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. Considering the per share profit growth, but keeping in mind the weak returns, we’d need more time to form a view on CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Kazia Therapeutics shares (free trial).
Important note: Kazia Therapeutics may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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.