Does Medibank Private Limited’s (ASX:MPL) CEO Salary Compare Well With Others?
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Craig Drummond has been the CEO of Medibank Private Limited (ASX:MPL) since 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Medibank Private
How Does Craig Drummond’s Compensation Compare With Similar Sized Companies?
According to our data, Medibank Private Limited has a market capitalization of AU$7.5b, and pays its CEO total annual compensation worth AU$3.7m. (This is based on the year to 2018). While we always look at total compensation first, we note that the salary component is less, at AU$1.5m. When we examined a selection of companies with market caps ranging from AU$5.6b to AU$17b, we found the median CEO compensation was AU$4.1m.
So Craig Drummond is paid around the average of the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.
You can see a visual representation of the CEO compensation at Medibank Private, below.
Is Medibank Private Limited Growing?
Over the last three years Medibank Private Limited has grown its earnings per share (EPS) by an average of 12% per year (using a line of best fit). In the last year, its revenue changed by just 1.0%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.
Has Medibank Private Limited Been A Good Investment?
Medibank Private Limited has served shareholders reasonably well, with a total return of 26% over three years. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary…
Craig Drummond is paid around what is normal the leaders of comparable size companies.
The company is growing EPS but shareholder returns have been sound but not amazing. As a result of these considerations, I would suggest the CEO pay is reasonable. So you may want to check if insiders are buying Medibank Private shares with their own money (free access).
Important note: Medibank Private may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
