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109.15
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Hang Seng
17,093.50
(3.05%)
Dow Jones
39,023.71
(0.66%)
Nikkei 225
38,797.51
(-0.06%)
FTSE 100
7,747.81
(1.02%)
USD/AUD
0.6617
(-0.2%)
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71,640.19
(-1.56%)
Oil
78.00
(0.57%)
Gold
2,163.90
(-0.1%)
Lithium
46.11
(4.37%)
Iron Ore
109.15
(1.77%)
Hang Seng
17,093.50
(3.05%)
Dow Jones
39,023.71
(0.66%)
Nikkei 225
38,797.51
(-0.06%)
FTSE 100
7,747.81
(1.02%)
USD/AUD
0.6617
(-0.2%)
Bitcoin
71,640.19
(-1.56%)
Oil
78.00
(0.57%)
Gold
2,163.90
(-0.1%)
Lithium
46.11
(4.37%)
Iron Ore
109.15
(1.77%)
Hang Seng
17,093.50
(3.05%)
Dow Jones
39,023.71
(0.66%)
Nikkei 225
38,797.51
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FTSE 100
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USD/AUD
0.6617
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Bitcoin
71,640.19
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Oil
78.00
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Gold
2,163.90
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Iron Ore
109.15
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Are HealthCare CEOs Overpaid in the Australian Exchange?

  • Author: Stock Piper

As earnings season approaches, CEO pay in the health care sector is coming under scrutiny. After all, inflation is high and consumers have less cash in their pockets. However, it is important to judge CEO pay based on what their peers make in the industry.  The health care sector in Australia is innovative and in full swing with companies such as OncoSil revolutionising pancreatic cancer treatments,  Acrux Ltd who focuses on applied products and Syntara Ltd trying to solve Rapid Eye Movement Sleep Behaviour Disorder (iRBD). 

Acrux Limited (ASX: $ACX): CEO, Mr. Michael Kotsanis

Acrux Limited has a market capitalization of AU$12m, and reported total annual CEO compensation of AU$710k for the year to June 2023. That's a fairly small increase of 6.0% from last year even as the salary portion of the total compensation for the CEO is estimated at AU $462.7k, making up the majority of the CEO’s earnings.  Comparing this against other companies in Australia’s pharmaceutical sector with market capitalizations of under AU $305m, CEO pay was estimated at AU $647k. This suggests that Acrux remunerates its CEO largely in line with the industry average. This article outlines the pay of three CEOs who manage promising health care companies listed on the Australian stock exchange. 

Pharmaxis Limited (ASX: $PXS): Mr. Gary Phillips

Pharmaxis Ltd, now Syntara Limited, has a market capitalization of AU $23m, and paid its CEO total annual compensation worth AU $754k over the year to June 2023. Notably, that's an increase of 20% over the year before. In particular, the salary of AU $461.9k, makes up a huge portion of the total compensation being paid to the CEO.  If you compare Mr. Philips earnings with that of Australian Pharmaceuticals companies with a market capitalization of AU$305m, you will find that his compensation is slightly higher than the industry average of AU$646k. 

OncoSil Limited (ASX: $OSL): Mr. Nigel Lange

Our data indicates that OncoSil Medical Limited has a market capitalization of AU$16m, and total annual CEO compensation was reported as AU$639k for the year to June 2023. That's a fairly small increase of 4.9% over the previous year. In particular, the salary of AU$388.3k, makes up a huge portion of the total compensation being paid to the CEO. In comparison with other companies in the Australia Life Sciences industry with market capitalizations under AU $305m, the reported median total CEO compensation was AU$588k. This suggests that OncoSil Medical remunerates its CEO largely in line with the industry average.

Earnings Season will back CEO Pay to the Spotlight

Although earnings season will put the CEO’s back on the spotlight, it is important to focus on firm performance and specific drivers of value. Innovation, regulatory approvals and marketability will become the most important factors driving the value of these firms. For companies like OncoSil now operating in over 35 countries, their share price will likely recover as revenues persist. As CEO pay is currently lower than the industry-average, Nigel Lange is definitely value for money from an investor standpoint.  Although CEO pay should be tied to performance, it is important that said pay reflect the industry average to ensure CEO’s are properly motivated to drive up shareholder value. Firms like Oncosil face a tough time for their share price performance over the last year, but researching, testing, approving and marketing a cancer treatment takes several years. As such, CEO pay should be seen from the perspective of firm performance, which includes share price and several other metrics. 

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