ASX:PMY Past Future Earnings Mar 31st 18
Is PMY’s CEO overpaid relative to the market?
While one size does not fit all, since remuneration should account for specific factors of the company and market, we can estimate a high-level yardstick to see if PMY is an outlier. This exercise can help direct shareholders to ask the right question about Noon’s incentive alignment. Normally, an Australian small-cap is worth around $140M, generates earnings of $10M, and pays its CEO at roughly $500,000 per annum. Typically I would use earnings and market cap to account for variations in performance, however, PMY’s negative earnings reduces the usefulness of my formula. Looking at the range of compensation for small-cap executives, it seems like Noon is remunerated sensibly relative to peers. Overall, though PMY is unprofitable, it seems like the CEO’s pay is reflective of the appropriate level.
Next Steps:
You can breathe easy knowing that shareholder funds aren’t being used to overpay PMY’s CEO. However, on the flipside, you should ask whether Noon is appropriately remunerated on the basis of retention. Its important for shareholders to be active in voting governance decisions, as board members are only representatives of investors’ voices. If you have not done so already, I highly recommend you to complete your research by taking a look at the following:
- Governance: To find out more about PMY’s governance, look through our infographic report of the company’s board and management.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PMY? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.