Medtronic plc (NYSE:MDT) has not performed well recently and CEO Geoff Martha will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 08 December 2022. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out the opportunities and risks within the US Medical Equipment industry.

Comparing Medtronic plc’s CEO Compensation With The Industry

At the time of writing, our data shows that Medtronic plc has a market capitalization of US$105b, and reported total annual CEO compensation of US$17m for the year to April 2022. That’s mostly flat as compared to the prior year’s compensation. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at US$1.3m.

In comparison with other companies in the industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$13m. This suggests that Geoff Martha is paid more than the median for the industry. Furthermore, Geoff Martha directly owns US$2.4m worth of shares in the company.

Component 2022 2021 Proportion (2022)
Salary US$1.3m US$1.1m 8%
Other US$16m US$15m 92%
Total Compensation US$17m US$16m 100%

Talking in terms of the industry, salary represented approximately 18% of total compensation out of all the companies we analyzed, while other remuneration made up 82% of the pie. In Medtronic’s case, non-salary compensation represents a greater slice of total remuneration, 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.

NYSE:MDT CEO Compensation December 2nd 2022

A Look at Medtronic plc’s Growth Numbers

Over the last three years, Medtronic plc has shrunk its earnings per share by 2.9% per year. It saw its revenue drop 3.1% over the last year.

A lack of EPS improvement is not good to see. This is compounded by the fact revenue is actually down on last year. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Medtronic plc Been A Good Investment?

Given the total shareholder loss of 24% over three years, many shareholders in Medtronic plc are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude…

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there’s little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management’s plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We’ve identified 1 warning sign for Medtronic 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 free list of interesting companies that have HIGH return on equity and low debt.

Valuation is complex, but we’re helping make it simple.

Find out whether Medtronic is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.


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