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Is Aware, Inc. (NASDAQ:AWRE) Overpaying Its CEO?

Simply Wall St

Kevin Russell became the CEO of Aware, Inc. (NASDAQ:AWRE) in 2017. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. 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.

See our latest analysis for Aware

How Does Kevin Russell's Compensation Compare With Similar Sized Companies?

Our data indicates that Aware, Inc. is worth US$64m, and total annual CEO compensation is US$438k. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$275k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$492k.

That means Kevin Russell receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

The graphic below shows how CEO compensation at Aware has changed from year to year.

NasdaqGM:AWRE CEO Compensation, September 2nd 2019

Is Aware, Inc. Growing?

Over the last three years Aware, Inc. has shrunk its earnings per share by an average of 70% per year (measured with a line of best fit). In the last year, its revenue is up 5.0%.

Unfortunately, earnings per share have trended lower over the last three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Aware, Inc. Been A Good Investment?

With a three year total loss of 43%, Aware, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Remuneration for Kevin Russell is close enough to the median pay for a CEO of a similar sized company .

After looking at EPS and total shareholder returns, it's certainly hard to argue the company has performed well, since both metrics are down. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. Shareholders may want to check for free if Aware insiders are buying or selling shares.

Important note: Aware 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.

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.

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. Thank you for reading.