A Quick Analysis On Zelira Therapeutics' (ASX:ZLD) CEO Compensation

Richard Hopkins became the CEO of Zelira Therapeutics Limited (ASX:ZLD) in 2018, and we think it's a good time to look at 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 Zelira Therapeutics.

View our latest analysis for Zelira Therapeutics

How Does Total Compensation For Richard Hopkins Compare With Other Companies In The Industry?

At the time of writing, our data shows that Zelira Therapeutics Limited has a market capitalization of AU$107m, and reported total annual CEO compensation of AU$414k for the year to June 2020. That is, the compensation was roughly the same as last year. Notably, the salary which is AU$300.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under AU$260m, the reported median total CEO compensation was AU$411k. From this we gather that Richard Hopkins is paid around the median for CEOs in the industry. Furthermore, Richard Hopkins directly owns AU$156k worth of shares in the company.

Talking in terms of the industry, salary represented approximately 66% of total compensation out of all the companies we analyzed, while other remuneration made up 34% of the pie. There isn't a significant difference between Zelira Therapeutics and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Zelira Therapeutics Limited's Growth

Over the last three years, Zelira Therapeutics Limited has shrunk its earnings per share by 1.9% per year. Its revenue is up 27% over the last year.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Zelira Therapeutics Limited Been A Good Investment?

With a three year total loss of 16% for the shareholders, Zelira Therapeutics Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, Zelira Therapeutics pays its CEO in line with similar-sized companies belonging to the same industry. However, revenues have increased over the past year, a positive sign for the company. On the other hand, shareholder returns for Richard are negative over the same period. EPS growth is bleak as well, adding fuel to the fire. We'd say CEO compensation isn't unfair, but shareholders may be wary of a bump in pay before the company substantially improves overall performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 5 warning signs for Zelira Therapeutics (of which 3 don't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Important note: Zelira Therapeutics 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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