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
• Over the past three years, Avanos Medical's EPS grew by 79% and over the past three years, the total loss to shareholders 58%

Shareholders of Avanos Medical, Inc. (NYSE:AVNS) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 25th of April could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Comparing Avanos Medical, Inc.'s CEO Compensation With The Industry

According to our data, Avanos Medical, Inc. has a market capitalization of US$807m, and paid its CEO total annual compensation worth US$7.2m over the year to December 2023. That's a fairly small increase of 5.0% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, 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. This suggests that Joe Woody is paid more than the median for the industry. 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.

On an industry level, roughly 29% of total compensation represents salary and 71% is other remuneration. Avanos Medical sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Avanos Medical, Inc.'s Growth Numbers

Avanos Medical, Inc.'s earnings per share (EPS) grew 79% per year over the last three years. Its revenue is down 1.6% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. 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?

The return of -58% over three years would not have pleased Avanos Medical, Inc. shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. 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. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Avanos Medical that you should be aware of before investing.

Important note: Avanos Medical is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.