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Does Cinedigm Corp.'s (NASDAQ:CIDM) CEO Pay Matter?

Chris McGurk has been the CEO of Cinedigm Corp. (NASDAQ:CIDM) since 2011. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. 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 Cinedigm

How Does Chris McGurk's Compensation Compare With Similar Sized Companies?

According to our data, Cinedigm Corp. has a market capitalization of US$70m, and pays its CEO total annual compensation worth US$1.6m. (This figure is for the year to March 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$600k. 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$432k.

It would therefore appear that Cinedigm Corp. pays Chris McGurk 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 get a better idea of how generous the pay is by looking at the performance of the underlying business.

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

NasdaqGM:CIDM CEO Compensation, April 17th 2019
NasdaqGM:CIDM CEO Compensation, April 17th 2019

Is Cinedigm Corp. Growing?

On average over the last three years, Cinedigm Corp. has grown earnings per share (EPS) by 83% each year (using a line of best fit). It saw its revenue drop -15% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. You might want to check this free visual report on analyst forecasts for future earnings.

Has Cinedigm Corp. Been A Good Investment?

Given the total loss of 10% over three years, many shareholders in Cinedigm Corp. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We examined the amount Cinedigm Corp. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Cinedigm 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.

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.

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