This article will reflect on the compensation paid to Roger Aston who has served as CEO of PharmAust Limited (ASX:PAA) since 2018. This analysis will also assess whether PharmAust pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for PharmAust
How Does Total Compensation For Roger Aston Compare With Other Companies In The Industry?
According to our data, PharmAust Limited has a market capitalization of AU$33m, and paid its CEO total annual compensation worth AU$285k over the year to June 2020. That is, the compensation was roughly the same as last year. Notably, the salary which is AU$260.0k, represents most of the total compensation being paid.
On comparing similar-sized companies in the industry with market capitalizations below AU$258m, we found that the median total CEO compensation was AU$427k. This suggests that Roger Aston is paid below the industry median. What's more, Roger Aston holds AU$1.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$260k | AU$260k | 91% |
| Other | AU$25k | AU$25k | 9% |
| Total Compensation | AU$285k | AU$285k | 100% |
On an industry level, around 66% of total compensation represents salary and 34% is other remuneration. PharmAust pays out 91% 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.
A Look at PharmAust Limited's Growth Numbers
PharmAust Limited's earnings per share (EPS) grew 35% per year over the last three years. Its revenue is down 5.2% over the previous year.
This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has PharmAust Limited Been A Good Investment?
Boasting a total shareholder return of 123% over three years, PharmAust 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 touched on above, PharmAust Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Since EPS growth is heading in a positive direction; many would agree with our assessment that the pay is modest. Given the strong history of shareholder returns, the shareholders are probably very happy with Roger's performance.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for PharmAust that investors should be aware of in a dynamic business environment.
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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About ASX:NUZ
Neurizon Therapeutics
A clinical stage biotechnology company, develops therapeutics for neurodegenerative diseases in Switzerland, Australia, the United States, and internationally.
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