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Is Electromed Inc’s (NYSEMKT:ELMD) CEO Being Overpaid?

In 2012 Kathleen Skarvan was appointed CEO of Electromed Inc (NYSEMKT:ELMD). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Electromed

How Does Kathleen Skarvan’s Compensation Compare With Similar Sized Companies?

Our data indicates that Electromed Inc is worth US$54m, and total annual CEO compensation is US$724k. That’s a notable increase of 26% on last year. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO compensation in that group is US$293k.

Thus we can conclude that Kathleen Skarvan receives more in total compensation than the median of a group of companies in the same market, and of similar size to Electromed Inc. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

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

AMEX:ELMD CEO Compensation November 14th 18

Is Electromed Inc Growing?

Electromed Inc has increased its earnings per share (EPS) by an average of 11% a year, over the last three years Its revenue is up 11% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business.

We don’t have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Electromed Inc Been A Good Investment?

Boasting a total shareholder return of 232% over three years, Electromed Inc has done well by shareholders. So they may not be at all concerned if the CEO is paid more than is normal for companies around the same size.

In Summary…

We examined the amount Electromed Inc pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if Electromed Inc insiders are buying or selling shares.

Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.