In the past three years, the share price of SomnoMed Limited (ASX:SOM) has struggled to grow and now shareholders are sitting on a loss. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 25 November 2022, where they can impact on future company performance by voting on resolutions, including executive compensation. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

View our latest analysis for SomnoMed

Comparing SomnoMed Limited's CEO Compensation With The Industry

Our data indicates that SomnoMed Limited has a market capitalization of AU$108m, and total annual CEO compensation was reported as AU$1.0m for the year to June 2022. Notably, that's an increase of 55% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$505k.

In comparison with other companies in the industry with market capitalizations under AU$301m, the reported median total CEO compensation was AU$535k. Accordingly, our analysis reveals that SomnoMed Limited pays Neil Verdal-Austin north of the industry median. What's more, Neil Verdal-Austin holds AU$2.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component 2022 2021 Proportion (2022) Salary AU$505k AU$393k 49% Other AU$535k AU$277k 51% Total Compensation AU$1.0m AU$670k 100%

Talking in terms of the industry, salary represented approximately 61% of total compensation out of all the companies we analyzed, while other remuneration made up 39% of the pie. It's interesting to note that SomnoMed allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

 ceo-compensation

A Look at SomnoMed Limited's Growth Numbers

Over the last three years, SomnoMed Limited has shrunk its earnings per share by 109% per year. In the last year, its revenue is up 16%.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 SomnoMed Limited Been A Good Investment?

With a total shareholder return of -47% over three years, SomnoMed Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for SomnoMed that you should be aware of before investing.

Switching gears from SomnoMed, if you're hunting for a pristine balance sheet and premium returns, this freelist of high return, low debt companies is a great place to look.

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

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.

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