The CEO of Medlab Clinical Limited (ASX:MDC) is Sean Hall, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Medlab Clinical

How Does Total Compensation For Sean Hall Compare With Other Companies In The Industry?

At the time of writing, our data shows that Medlab Clinical Limited has a market capitalization of AU$59m, and reported total annual CEO compensation of AU$379k for the year to June 2020. That's a modest increase of 4.1% on the prior year. Notably, the salary which is AU$300.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under AU$282m, the reported median total CEO compensation was AU$440k. So it looks like Medlab Clinical compensates Sean Hall in line with the median for the industry. Moreover, Sean Hall also holds AU$13m worth of Medlab Clinical stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represented approximately 65% of total compensation out of all the companies we analyzed, while other remuneration made up 35% of the pie. According to our research, Medlab Clinical has allocated a higher percentage of pay to salary in comparison to the wider industry. 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.

A Look at Medlab Clinical Limited's Growth Numbers

Medlab Clinical Limited has reduced its earnings per share by 39% a year over the last three years. Its revenue is down 48% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Medlab Clinical Limited Been A Good Investment?

Since shareholders would have lost about 68% over three years, some Medlab Clinical Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we touched on above, Medlab Clinical Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 5 warning signs for Medlab Clinical (of which 1 is potentially serious!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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