We Discuss Why The CEO Of Omega Flex, Inc. (NASDAQ:OFLX) Is Due For A Pay Rise
The solid performance at Omega Flex, Inc. (NASDAQ:OFLX) has been impressive and shareholders will probably be pleased to know that CEO Kevin Hoben has delivered. At the upcoming AGM on 09 June 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.
View our latest analysis for Omega Flex
Comparing Omega Flex, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Omega Flex, Inc. has a market capitalization of US$1.5b, and reported total annual CEO compensation of US$2.4m for the year to December 2020. We note that's an increase of 21% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$469k.
On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$3.7m. That is to say, Kevin Hoben is paid under the industry median. Moreover, Kevin Hoben also holds US$141m worth of Omega Flex stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$469k | US$445k | 19% |
Other | US$2.0m | US$1.6m | 81% |
Total Compensation | US$2.4m | US$2.0m | 100% |
On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. Our data reveals that Omega Flex allocates salary more or less in line with the wider market. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Omega Flex, Inc.'s Growth Numbers
Omega Flex, Inc.'s earnings per share (EPS) grew 12% per year over the last three years. It achieved revenue growth of 1.4% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Omega Flex, Inc. Been A Good Investment?
Boasting a total shareholder return of 129% over three years, Omega Flex, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Omega Flex that investors should look into moving forward.
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.
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. 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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