How Much Is LBT Innovations' (ASX:LBT) CEO Getting Paid?

Brent Barnes became the CEO of LBT Innovations Limited (ASX:LBT) in 2016, and we think it's a good time to look at 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 LBT Innovations

How Does Total Compensation For Brent Barnes Compare With Other Companies In The Industry?

At the time of writing, our data shows that LBT Innovations Limited has a market capitalization of AU$37m, and reported total annual CEO compensation of AU$420k for the year to June 2020. That's just a smallish increase of 4.7% on last year. Notably, the salary which is AU$338.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below AU$281m, we found that the median total CEO compensation was AU$607k. This suggests that Brent Barnes is paid below the industry median. What's more, Brent Barnes holds AU$119k worth of shares in the company in their own name.

Talking in terms of the industry, salary represented approximately 63% of total compensation out of all the companies we analyzed, while other remuneration made up 37% of the pie. LBT Innovations pays out 80% of remuneration in the form of a salary, significantly higher than the industry average. 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.

LBT Innovations Limited's Growth

LBT Innovations Limited's earnings per share (EPS) grew 19% per year over the last three years. In the last year, the company lost virtually all of its revenue.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has LBT Innovations Limited Been A Good Investment?

Given the total shareholder loss of 55% over three years, many shareholders in LBT Innovations Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we noted earlier, LBT Innovations pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Importantly though, the company has impressed with its EPS growth over three years. Although we would've liked to see positive investor returns, it would be bold of us to criticize CEO compensation when EPS are up. But shareholders will likely want to hold off on any raise for Brent until investor returns are positive.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 5 warning signs for LBT Innovations you should be aware of, and 2 of them are a bit concerning.

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

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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