Does PolyNovo Limited's (ASX:PNV) CEO Pay Matter?
In 2015 Paul Brennan was appointed CEO of PolyNovo Limited (ASX:PNV). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for PolyNovo
How Does Paul Brennan's Compensation Compare With Similar Sized Companies?
Our data indicates that PolyNovo Limited is worth AU$1.3b, and total annual CEO compensation was reported as AU$316k for the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$265k. When we examined a selection of companies with market caps ranging from AU$642m to AU$2.6b, we found the median CEO total compensation was AU$1.7m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where PolyNovo stands. On an industry level, roughly 78% of total compensation represents salary and 22% is other remuneration. Our data reveals that PolyNovo allocates salary in line with the wider market.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion. You can see a visual representation of the CEO compensation at PolyNovo, below.
Is PolyNovo Limited Growing?
On average over the last three years, PolyNovo Limited has seen earnings per share (EPS) move in a favourable direction by 14% each year (using a line of best fit). It achieved revenue growth of 95% over the last year.
This demonstrates that the company has been improving recently. A good result. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has PolyNovo Limited Been A Good Investment?
Boasting a total shareholder return of 680% over three years, PolyNovo Limited has done well by shareholders. 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.
In Summary...
PolyNovo Limited is currently paying its CEO below what is normal for companies of its size.
Considering the underlying business is growing earnings, this would suggest the pay is modest. The strong history of shareholder returns might even have some thinking that Paul Brennan deserves a raise! It's not often we see shareholders do so well, and yet the CEO is paid modestly. But it is even better if company insiders are also buying shares with their own money. Shifting gears from CEO pay for a second, we've picked out 2 warning signs for PolyNovo that investors should be aware of in a dynamic business environment.
If you want to buy a stock that is better than PolyNovo, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
