Shareholders will be pleased by the robust performance of Rhythm Biosciences Limited (ASX:RHY) recently and this will be kept in mind in the upcoming AGM on 24 November 2021. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

Check out our latest analysis for Rhythm Biosciences

How Does Total Compensation For Glenn Gilbert Compare With Other Companies In The Industry?

According to our data, Rhythm Biosciences Limited has a market capitalization of AU$382m, and paid its CEO total annual compensation worth AU$551k over the year to June 2021. We note that's an increase of 45% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$270k.

In comparison with other companies in the industry with market capitalizations ranging from AU$137m to AU$547m, the reported median CEO total compensation was AU$1.1m. In other words, Rhythm Biosciences pays its CEO lower than the industry median. Moreover, Glenn Gilbert also holds AU$2.2m worth of Rhythm Biosciences stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component 2021 2020 Proportion (2021) Salary AU$270k AU$266k 49% Other AU$281k AU$115k 51% Total Compensation AU$551k AU$380k 100%

On an industry level, roughly 55% of total compensation represents salary and 45% is other remuneration. In Rhythm Biosciences' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance. ceo-compensation

Rhythm Biosciences Limited's Growth



Over the last three years, Rhythm Biosciences Limited has shrunk its earnings per share by 16% per year. It achieved revenue growth of 1,009% over the last year.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Rhythm Biosciences Limited Been A Good Investment?

We think that the total shareholder return of 1,298%, over three years, would leave most Rhythm Biosciences Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 2 which are a bit concerning) in Rhythm Biosciences we think you should know about.

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

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.

Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.