How Does Living Cell Technologies' (ASX:LCT) CEO Pay Compare With Company Performance?

This article will reflect on the compensation paid to Ken Taylor who has served as CEO of Living Cell Technologies Limited (ASX:LCT) since 2014. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Living Cell Technologies.

See our latest analysis for Living Cell Technologies

How Does Total Compensation For Ken Taylor Compare With Other Companies In The Industry?

At the time of writing, our data shows that Living Cell Technologies Limited has a market capitalization of AU$8.0m, and reported total annual CEO compensation of AU$357k for the year to June 2020. Notably, that's a decrease of 8.4% over the year before. It is worth noting that the CEO compensation consists entirely of the salary, worth AU$357k.

In comparison with other companies in the industry with market capitalizations under AU$257m, the reported median total CEO compensation was AU$406k. From this we gather that Ken Taylor is paid around the median for CEOs in the industry.

On an industry level, around 65% of total compensation represents salary and 35% is other remuneration. Speaking on a company level, Living Cell Technologies prefers to tread along a traditional path, disbursing all compensation through a salary. 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 Living Cell Technologies Limited's Growth Numbers

Living Cell Technologies Limited has seen its earnings per share (EPS) increase by 35% a year over the past three years. Its revenue is down 28% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Living Cell Technologies Limited Been A Good Investment?

Given the total shareholder loss of 50% over three years, many shareholders in Living Cell Technologies Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

Living Cell Technologies rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we touched on above, Living Cell Technologies Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, the company has logged negative shareholder returns over the previous three years. But EPS growth is moving in a favorable direction, certainly a positive sign. Considering positive EPS growth, we'd say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 3 warning signs for Living Cell Technologies that investors should look into moving forward.

Important note: Living Cell Technologies is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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