How Should Investors React To CyberOptics' (NASDAQ:CYBE) CEO Pay?
Subodh Kulkarni has been the CEO of CyberOptics Corporation (NASDAQ:CYBE) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for CyberOptics.
View our latest analysis for CyberOptics
Comparing CyberOptics Corporation's CEO Compensation With the industry
According to our data, CyberOptics Corporation has a market capitalization of US$235m, and paid its CEO total annual compensation worth US$764k over the year to December 2019. That's a notable decrease of 25% on last year. In particular, the salary of US$400.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar companies from the same industry with market caps ranging from US$100m to US$400m, we found that the median CEO total compensation was US$1.3m. This suggests that Subodh Kulkarni is paid below the industry median. Furthermore, Subodh Kulkarni directly owns US$3.3m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$400k | US$375k | 52% |
Other | US$364k | US$643k | 48% |
Total Compensation | US$764k | US$1.0m | 100% |
Talking in terms of the industry, salary represented approximately 14% of total compensation out of all the companies we analyzed, while other remuneration made up 86% of the pie. CyberOptics pays out 52% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
CyberOptics Corporation's Growth
Over the last three years, CyberOptics Corporation has shrunk its earnings per share by 35% per year. Its revenue is down 4.7% over the previous year.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has CyberOptics Corporation Been A Good Investment?
We think that the total shareholder return of 109%, over three years, would leave most CyberOptics Corporation shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
As we noted earlier, CyberOptics pays its CEO lower than the norm for similar-sized companies belonging to the same industry. And while EPS growth is in the red, shareholder returns have been great over the last three years, so that's certainly a bright spot! We would like to see EPS growth, but in our view CEO compensation is modest.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 1 warning sign for CyberOptics that investors should be aware of in a dynamic business environment.
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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