Joe Harary has been the CEO of Research Frontiers Incorporated (NASDAQ:REFR) since 2009, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Research Frontiers pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Research Frontiers Incorporated's CEO Compensation With the industry
At the time of writing, our data shows that Research Frontiers Incorporated has a market capitalization of US$89m, and reported total annual CEO compensation of US$805k for the year to December 2019. That's a notable increase of 23% on last year. In particular, the salary of US$500.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$361k. Accordingly, our analysis reveals that Research Frontiers Incorporated pays Joe Harary north of the industry median. Furthermore, Joe Harary directly owns US$1.4m worth of shares in the company.
On an industry level, roughly 34% of total compensation represents salary and 66% is other remuneration. Research Frontiers is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Research Frontiers Incorporated's Growth Numbers
Research Frontiers Incorporated has seen its earnings per share (EPS) increase by 2.5% a year over the past three years. Its revenue is down 31% over the previous year.
We would prefer it if there was revenue growth, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Research Frontiers Incorporated Been A Good Investment?
We think that the total shareholder return of 175%, over three years, would leave most Research Frontiers Incorporated shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
As we touched on above, Research Frontiers Incorporated is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Importantly though, shareholder returns for the last three years have been excellent. That's why we were hoping EPS growth would match this growth, but sadly that is not the case. All things considered, we don't think there's a reason to criticize CEO compensation, though we hope Research Frontiers will post healthier EPS growth moving forward.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Research Frontiers that investors should think about before committing capital to this stock.
Switching gears from Research Frontiers, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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