Key Insights

Sonic Healthcare's Annual General Meeting to take place on 15th of November Salary of AU$2.37m is part of CEO Colin Goldschmidt's total remuneration The overall pay is comparable to the industry average Sonic Healthcare's three-year loss to shareholders was 2.9% while its EPS grew by 9.1% over the past three years

In the past three years, the share price of Sonic Healthcare Limited (ASX:SHL) has struggled to generate growth for its shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 15th of November. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Sonic Healthcare

How Does Total Compensation For Colin Goldschmidt Compare With Other Companies In The Industry?

At the time of writing, our data shows that Sonic Healthcare Limited has a market capitalization of AU$14b, and reported total annual CEO compensation of AU$6.0m for the year to June 2023. Notably, that's a decrease of 22% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$2.4m.

On examining similar-sized companies in the Australian Healthcare industry with market capitalizations between AU$6.2b and AU$19b, we discovered that the median CEO total compensation of that group was AU$6.0m. So it looks like Sonic Healthcare compensates Colin Goldschmidt in line with the median for the industry. Moreover, Colin Goldschmidt also holds AU$28m worth of Sonic Healthcare stock directly under their own name, which reveals to us that they have a significant personal stake in the company.



Component 2023 2022 Proportion (2023) Salary AU$2.4m AU$2.4m 40% Other AU$3.6m AU$5.3m 60% Total Compensation AU$6.0m AU$7.7m 100%

On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. It's interesting to note that Sonic Healthcare 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 Sonic Healthcare Limited's Growth Numbers

Sonic Healthcare Limited has seen its earnings per share (EPS) increase by 9.1% a year over the past three years. Its revenue is down 13% over the previous year.

We generally like to see a little revenue growth, but the modest EPS growth gives us some relief. 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 Sonic Healthcare Limited Been A Good Investment?

Since shareholders would have lost about 2.9% over three years, some Sonic Healthcare Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. 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 is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for Sonic Healthcare that investors should be aware of in a dynamic business environment.

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.

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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.