Should Shareholders Reconsider Nova Leap Health Corp.'s (CVE:NLH) CEO Compensation Package?

Key Insights

• Nova Leap Health's Annual General Meeting to take place on 7th of June
• Salary of US$60.4k is part of CEO Chris Dobbin's total remuneration
• Total compensation is similar to the industry average
• Nova Leap Health's three-year loss to shareholders was 62% while its EPS was down 113% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Nova Leap Health Corp. (CVE:NLH) recently. At the upcoming AGM on 7th of June, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Nova Leap Health

Comparing Nova Leap Health Corp.'s CEO Compensation With The Industry

At the time of writing, our data shows that Nova Leap Health Corp. has a market capitalization of CA$28m, and reported total annual CEO compensation of US$272k for the year to December 2023. That's a modest increase of 5.1% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$60k.

In comparison with other companies in the Canadian Healthcare industry with market capitalizations under CA$273m, the reported median total CEO compensation was US$357k. This suggests that Nova Leap Health remunerates its CEO largely in line with the industry average. Moreover, Chris Dobbin also holds CA$2.8m worth of Nova Leap Health stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$60k	US$59k	22%
Other	US$211k	US$199k	78%
Total Compensation	US$272k	US$259k	100%

On an industry level, roughly 52% of total compensation represents salary and 48% is other remuneration. It's interesting to note that Nova Leap Health allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Nova Leap Health Corp.'s Growth

Over the last three years, Nova Leap Health Corp. has shrunk its earnings per share by 113% per year. Its revenue is down 4.0% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Nova Leap Health Corp. Been A Good Investment?

The return of -62% over three years would not have pleased Nova Leap Health Corp. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business 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 3 warning signs for Nova Leap Health (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Important note: Nova Leap Health 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.