Here's Why Fisher & Paykel Healthcare Corporation Limited's (NZSE:FPH) CEO Compensation Is The Least Of Shareholders Concerns

Key Insights

• Fisher & Paykel Healthcare to hold its Annual General Meeting on 28th of August
• CEO Lewis Gradon's total compensation includes salary of NZ$1.79m
• Total compensation is 79% below industry average
• Over the past three years, Fisher & Paykel Healthcare's EPS fell by 37% and over the past three years, the total shareholder return was 5.8%

The performance at Fisher & Paykel Healthcare Corporation Limited (NZSE:FPH) has been rather lacklustre of late and shareholders may be wondering what CEO Lewis Gradon is planning to do about this. At the next AGM coming up on 28th of August, they can influence managerial decision making through voting on resolutions, including executive remuneration. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for Fisher & Paykel Healthcare

Comparing Fisher & Paykel Healthcare Corporation Limited's CEO Compensation With The Industry

Our data indicates that Fisher & Paykel Healthcare Corporation Limited has a market capitalization of NZ$19b, and total annual CEO compensation was reported as NZ$3.5m for the year to March 2024. We note that's an increase of 38% above last year. We note that the salary of NZ$1.79m makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar companies in the New Zealand Medical Equipment industry with market capitalizations above NZ$13b, we found that the median total CEO compensation was NZ$17m. This suggests that Lewis Gradon is paid below the industry median. Furthermore, Lewis Gradon directly owns NZ$19m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	NZ$1.8m	NZ$1.7m	51%
Other	NZ$1.7m	NZ$853k	49%
Total Compensation	NZ$3.5m	NZ$2.6m	100%

Speaking on an industry level, nearly 56% of total compensation represents salary, while the remainder of 44% is other remuneration. Fisher & Paykel Healthcare is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Fisher & Paykel Healthcare Corporation Limited's Growth Numbers

Over the last three years, Fisher & Paykel Healthcare Corporation Limited has shrunk its earnings per share by 37% per year. It achieved revenue growth of 10% over the last year.

Overall this is not a very positive result for shareholders. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. 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 Fisher & Paykel Healthcare Corporation Limited Been A Good Investment?

Fisher & Paykel Healthcare Corporation Limited has generated a total shareholder return of 5.8% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Fisher & Paykel Healthcare that you should be aware of before investing.

Switching gears from Fisher & Paykel Healthcare, 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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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.