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This article will reflect on the compensation paid to Earl Refsland who has served as CEO of Allied Healthcare Products, Inc. (NASDAQ:AHPI) since 1999. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Allied Healthcare Products, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Allied Healthcare Products, Inc. has a market capitalization of US$19m, and reported total annual CEO compensation of US$502k for the year to June 2020. That is, the compensation was roughly the same as last year. In particular, the salary of US$429.0k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$581k. So it looks like Allied Healthcare Products compensates Earl Refsland in line with the median for the industry. Moreover, Earl Refsland also holds US$859k worth of Allied Healthcare Products stock directly under their own name.
Speaking on an industry level, nearly 20% of total compensation represents salary, while the remainder of 80% is other remuneration. According to our research, Allied Healthcare Products has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Allied Healthcare Products, Inc.'s Growth
Over the last three years, Allied Healthcare Products, Inc. has shrunk its earnings per share by 6.3% per year. In the last year, its revenue is up 1.6%.
Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Allied Healthcare Products, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Allied Healthcare Products, Inc. for providing a total return of 117% over three years. 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.
As previously discussed, Earl is compensated close to the median for companies of its size, and which belong to the same industry. This isn't great when you look at it against the backdrop of EPS growth, which has been negative for the past three years. On the other hand, shareholder returns are showing positive trends over the same time frame. We wouldn't say CEO compensation is too high, but shareholders might think performance needs to be improved before paying any more.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 1 which is a bit concerning) in Allied Healthcare Products we think you should know about.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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