Does Electromed, Inc.'s (NYSEMKT:ELMD) CEO Pay Matter?
In 2012 Kathleen Skarvan was appointed CEO of Electromed, Inc. (NYSEMKT:ELMD). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for Electromed
How Does Kathleen Skarvan's Compensation Compare With Similar Sized Companies?
According to our data, Electromed, Inc. has a market capitalization of US$85m, and paid its CEO total annual compensation worth US$868k over the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at US$397k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$521k.
It would therefore appear that Electromed, Inc. pays Kathleen Skarvan more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Electromed has changed over time.
Is Electromed, Inc. Growing?
Over the last three years Electromed, Inc. has grown its earnings per share (EPS) by an average of 6.3% per year (using a line of best fit). In the last year, its revenue is up 10%.
This revenue growth could really point to a brighter future. And the modest growth in earnings per share isn't bad, either. Although we'll stop short of calling the stock a top performer, we think the company has potential. Shareholders might be interested in this free visualization of analyst forecasts.
Has Electromed, Inc. Been A Good Investment?
Boasting a total shareholder return of 151% over three years, Electromed, Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
We compared the total CEO remuneration paid by Electromed, Inc., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
While we generally prefer to see stronger EPS growth, there's no arguing with the strong returns to shareholders, over the last three years. As a result of the juicy return to investors, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Electromed shares (free trial).
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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
