Key Things To Understand About Rhinomed's (ASX:RNO) CEO Pay Cheque

Michael Johnson is the CEO of Rhinomed Limited (ASX:RNO), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether Rhinomed pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Rhinomed

Comparing Rhinomed Limited's CEO Compensation With the industry

According to our data, Rhinomed Limited has a market capitalization of AU$32m, and paid its CEO total annual compensation worth AU$1.0m over the year to June 2020. That's a notable increase of 39% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$304k.

On comparing similar-sized companies in the industry with market capitalizations below AU$259m, we found that the median total CEO compensation was AU$427k. Hence, we can conclude that Michael Johnson is remunerated higher than the industry median.

Speaking on an industry level, nearly 66% of total compensation represents salary, while the remainder of 34% is other remuneration. In Rhinomed's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Rhinomed Limited's Growth Numbers

Over the past three years, Rhinomed Limited has seen its earnings per share (EPS) grow by 9.7% per year. In the last year, its revenue is up 26%.

It's hard to interpret the strong revenue growth as anything other than a positive. With that in mind, the modestly improving EPS seems positive. So while we'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Rhinomed Limited Been A Good Investment?

Rhinomed Limited has generated a total shareholder return of 4.2% over three years, so most shareholders wouldn't be too disappointed. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

As previously discussed, Michael is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company lacks EPS growth, and returns to shareholders are less than stellar, over the last three years. Overall, although the company has delivered steady performance, we would like to see an improvement in key metrics before we can say the high CEO compensation is justified.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 5 warning signs for Rhinomed (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

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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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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