Stock Analysis

What We Learned About Medlab Clinical's (ASX:MDC) CEO Pay

  •  Updated
ASX:MDC
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The CEO of Medlab Clinical Limited (ASX:MDC) is Sean Hall, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Medlab Clinical.

See our latest analysis for Medlab Clinical

How Does Total Compensation For Sean Hall Compare With Other Companies In The Industry?

At the time of writing, our data shows that Medlab Clinical Limited has a market capitalization of AU$89m, and reported total annual CEO compensation of AU$379k for the year to June 2020. That's a fairly small increase of 4.1% over the previous year. We note that the salary portion, which stands at AU$300.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under AU$254m, the reported median total CEO compensation was AU$428k. This suggests that Medlab Clinical remunerates its CEO largely in line with the industry average. Furthermore, Sean Hall directly owns AU$19m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary AU$300k AU$299k 79%
Other AU$79k AU$65k 21%
Total CompensationAU$379k AU$364k100%

Speaking on an industry level, nearly 67% of total compensation represents salary, while the remainder of 33% is other remuneration. Medlab Clinical pays out 79% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ASX:MDC CEO Compensation February 22nd 2021

Medlab Clinical Limited's Growth

Over the last three years, Medlab Clinical Limited has shrunk its earnings per share by 39% per year. Its revenue is down 48% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Medlab Clinical Limited Been A Good Investment?

With a three year total loss of 57% for the shareholders, Medlab Clinical Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, Medlab Clinical pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 5 warning signs (and 1 which makes us a bit uncomfortable) in Medlab Clinical we think you should know about.

Switching gears from Medlab Clinical, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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