Stock Analysis

A Quick Analysis On AFT Pharmaceuticals' (NZSE:AFT) CEO Compensation

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This article will reflect on the compensation paid to Hartley Atkinson who has served as CEO of AFT Pharmaceuticals Limited (NZSE:AFT) since 1997. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for AFT Pharmaceuticals

Comparing AFT Pharmaceuticals Limited's CEO Compensation With the industry

At the time of writing, our data shows that AFT Pharmaceuticals Limited has a market capitalization of NZ$497m, and reported total annual CEO compensation of NZ$592k for the year to March 2020. That's a modest increase of 6.5% on the prior year. We note that the salary portion, which stands at NZ$442.8k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between NZ$277m and NZ$1.1b had a median total CEO compensation of NZ$1.1m. This suggests that Hartley Atkinson is paid below the industry median.

Component20202019Proportion (2020)
Salary NZ$443k NZ$431k 75%
Other NZ$150k NZ$126k 25%
Total CompensationNZ$592k NZ$556k100%

Speaking on an industry level, nearly 66% of total compensation represents salary, while the remainder of 34% is other remuneration. AFT Pharmaceuticals pays out 75% of remuneration in the form of a salary, significantly higher than the industry average. 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.

NZSE:AFT CEO Compensation February 13th 2021

A Look at AFT Pharmaceuticals Limited's Growth Numbers

AFT Pharmaceuticals Limited has seen its earnings per share (EPS) increase by 101% a year over the past three years. In the last year, its revenue is up 15%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has AFT Pharmaceuticals Limited Been A Good Investment?

Boasting a total shareholder return of 107% over three years, AFT Pharmaceuticals Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

As we touched on above, AFT Pharmaceuticals Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. When taking into account the company's strong EPS growth over the past three years, it appears CEO compensation is modest. Given the strong history of shareholder returns, the shareholders are probably very happy with Hartley's performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for AFT Pharmaceuticals (1 can't be ignored!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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