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Is Cytosorbents Corporation's (NASDAQ:CTSO) CEO Salary Justified?

Simply Wall St

Phillip Chan has been the CEO of Cytosorbents Corporation (NASDAQ:CTSO) since 2009. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Cytosorbents

How Does Phillip Chan's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Cytosorbents Corporation has a market cap of US$137m, and reported total annual CEO compensation of US$1.2m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$400k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$496k.

Thus we can conclude that Phillip Chan receives more in total compensation than the median of a group of companies in the same market, and of similar size to Cytosorbents Corporation. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Cytosorbents, below.

NasdaqCM:CTSO CEO Compensation, October 11th 2019

Is Cytosorbents Corporation Growing?

Over the last three years Cytosorbents Corporation has shrunk its earnings per share by an average of 14% per year (measured with a line of best fit). It achieved revenue growth of 21% over the last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has Cytosorbents Corporation Been A Good Investment?

Given the total loss of 25% over three years, many shareholders in Cytosorbents Corporation are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared total CEO remuneration at Cytosorbents Corporation with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us. Over the same period, investors would have come away with nothing in the way of share price gains. Some might well form the view that the CEO is paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Cytosorbents (free visualization of insider trades).

Important note: Cytosorbents 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.