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Shawn O'Connor became the CEO of Simulations Plus, Inc. (NASDAQ:SLP) in 2018, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Simulations Plus.
How Does Total Compensation For Shawn O'Connor Compare With Other Companies In The Industry?
Our data indicates that Simulations Plus, Inc. has a market capitalization of US$1.5b, and total annual CEO compensation was reported as US$739k for the year to August 2020. That's a notable increase of 74% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$350k.
For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$3.5m. This suggests that Shawn O'Connor is paid below the industry median.
On an industry level, roughly 14% of total compensation represents salary and 86% is other remuneration. According to our research, Simulations Plus has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Simulations Plus, Inc.'s Growth
Simulations Plus, Inc. has seen its earnings per share (EPS) increase by 14% a year over the past three years. It achieved revenue growth of 20% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Simulations Plus, Inc. Been A Good Investment?
Boasting a total shareholder return of 368% over three years, Simulations Plus, Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
As we noted earlier, Simulations Plus pays its CEO lower than the norm for similar-sized companies belonging to the same industry. When taking into account the company's strong EPS growth over the past three years, it appears CEO compensation is modest. Given the strong history of shareholder returns, the shareholders are probably very happy with Shawn's performance.
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 did our research and spotted 3 warning signs for Simulations Plus 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.
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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