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Vivek Jain became the CEO of ICU Medical, Inc. (NASDAQ:ICUI) in 2014, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing ICU Medical, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that ICU Medical, Inc. has a market capitalization of US$3.8b, and reported total annual CEO compensation of US$2.8m for the year to December 2019. We note that's a decrease of 53% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$650k.
For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.6m. That is to say, Vivek Jain is paid under the industry median. What's more, Vivek Jain holds US$12m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. According to our research, ICU Medical has allocated a higher percentage of pay to salary in comparison to the wider industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at ICU Medical, Inc.'s Growth Numbers
ICU Medical, Inc. has seen its earnings per share (EPS) increase by 15% a year over the past three years. Its revenue is down 4.2% over the previous year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has ICU Medical, Inc. Been A Good Investment?
Given the total shareholder loss of 2.6% over three years, many shareholders in ICU Medical, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
As previously discussed, Vivek is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Importantly though, the company has impressed with its EPS growth over three years. Considering EPS are on the up, we would say Vivek is compensated fairly. But shareholders will likely want to hold off on any raise for Vivek until investor returns are positive.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for ICU Medical 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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