Stock Analysis

We Discuss Whether AFT Pharmaceuticals Limited's (NZSE:AFT) CEO Is Due For A Pay Rise

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NZSE:AFT
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Shareholders will be pleased by the impressive results for AFT Pharmaceuticals Limited (NZSE:AFT) recently and CEO Hartley Atkinson has played a key role. This would be kept in mind at the upcoming AGM on 05 August 2021 which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

View our latest analysis for AFT Pharmaceuticals

Comparing AFT Pharmaceuticals Limited's CEO Compensation With the industry

According to our data, AFT Pharmaceuticals Limited has a market capitalization of NZ$476m, and paid its CEO total annual compensation worth NZ$701k over the year to March 2021. We note that's an increase of 18% above last year. Notably, the salary which is NZ$506.1k, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from NZ$285m to NZ$1.1b, we found that the median CEO total compensation was NZ$1.7m. Accordingly, AFT Pharmaceuticals pays its CEO under the industry median. Moreover, Hartley Atkinson also holds NZ$332m worth of AFT Pharmaceuticals stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary NZ$506k NZ$443k 72%
Other NZ$195k NZ$150k 28%
Total CompensationNZ$701k NZ$592k100%

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. Our data reveals that AFT Pharmaceuticals allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
NZSE:AFT CEO Compensation July 30th 2021

AFT Pharmaceuticals Limited's Growth

AFT Pharmaceuticals Limited has seen its earnings per share (EPS) increase by 92% a year over the past three years. It achieved revenue growth of 7.1% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has AFT Pharmaceuticals Limited Been A Good Investment?

Most shareholders would probably be pleased with AFT Pharmaceuticals Limited for providing a total return of 94% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

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. We did our research and identified 3 warning signs (and 2 which are significant) in AFT Pharmaceuticals we think you should know about.

Important note: AFT Pharmaceuticals 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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