Here's Why Shareholders May Want To Be Cautious With Increasing Surmodics, Inc.'s (NASDAQ:SRDX) CEO Pay Packet
Key Insights
Surmodics will host its Annual General Meeting on 8th of February
Salary of US$640.4k is part of CEO Gary Maharaj's total remuneration
Total compensation is similar to the industry average
Surmodics' three-year loss to shareholders was 28% while its EPS grew by 96% over the past three years
Shareholders of Surmodics, Inc. (NASDAQ:SRDX) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 8th of February could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
See our latest analysis for Surmodics
Comparing Surmodics, Inc.'s CEO Compensation With The Industry
According to our data, Surmodics, Inc. has a market capitalization of US$462m, and paid its CEO total annual compensation worth US$3.5m over the year to September 2023. Notably, that's an increase of 14% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$640k.
On examining similar-sized companies in the American Medical Equipment industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$3.1m. So it looks like Surmodics compensates Gary Maharaj in line with the median for the industry. Moreover, Gary Maharaj also holds US$6.2m worth of Surmodics stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$640k | US$620k | 18% |
Other | US$2.9m | US$2.5m | 82% |
Total Compensation | US$3.5m | US$3.1m | 100% |
Talking in terms of the industry, salary represented approximately 27% of total compensation out of all the companies we analyzed, while other remuneration made up 73% of the pie. Surmodics pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Surmodics, Inc.'s Growth Numbers
Surmodics, Inc.'s earnings per share (EPS) grew 96% per year over the last three years. In the last year, its revenue is up 36%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Surmodics, Inc. Been A Good Investment?
With a three year total loss of 28% for the shareholders, Surmodics, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Surmodics that investors should look into moving forward.
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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
