Yahoo Finance Here's Why Shareholders May Want To Be Cautious With Increasing Avanos Medical, Inc.'s (NYSE:AVNS) CEO Pay Packet
Key Insights
Avanos Medical will host its Annual General Meeting on 25th of April
CEO Joe Woody's total compensation includes salary of US$1.02m
The overall pay is 64% above the industry average
Avanos Medical's EPS grew by 79% over the past three years while total shareholder loss over the past three years was 58%
The underwhelming share price performance of Avanos Medical, Inc. (NYSE:AVNS) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 25th of April. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
View our latest analysis for Avanos Medical
How Does Total Compensation For Joe Woody Compare With Other Companies In The Industry?
At the time of writing, our data shows that Avanos Medical, Inc. has a market capitalization of US$807m, and reported total annual CEO compensation of US$7.2m for the year to December 2023. That's a fairly small increase of 5.0% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.
On comparing similar companies from the American Medical Equipment industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$4.4m. Accordingly, our analysis reveals that Avanos Medical, Inc. pays Joe Woody north of the industry median. Furthermore, Joe Woody directly owns US$4.8m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.0m | US$1.0m | 14% |
Other | US$6.2m | US$5.9m | 86% |
Total Compensation | US$7.2m | US$6.9m | 100% |
Talking in terms of the industry, salary represented approximately 29% of total compensation out of all the companies we analyzed, while other remuneration made up 71% of the pie. It's interesting to note that Avanos Medical allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Avanos Medical, Inc.'s Growth
Avanos Medical, Inc.'s earnings per share (EPS) grew 79% per year over the last three years. It saw its revenue drop 1.6% over the last year.
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. 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 Avanos Medical, Inc. Been A Good Investment?
Few Avanos Medical, Inc. shareholders would feel satisfied with the return of -58% over three years. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders 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. We did our research and spotted 1 warning sign for Avanos Medical that investors should look into moving forward.
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.
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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.
