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Fred Lampropoulos became the CEO of Merit Medical Systems, Inc. (NASDAQ:MMSI) in 1987, 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 assess whether Merit Medical Systems pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Merit Medical Systems, Inc.'s CEO Compensation With the industry
According to our data, Merit Medical Systems, Inc. has a market capitalization of US$3.1b, and paid its CEO total annual compensation worth US$5.0m over the year to December 2019. That's a notable increase of 37% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.8m.
In comparison with other companies in the industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$5.4m. So it looks like Merit Medical Systems compensates Fred Lampropoulos in line with the median for the industry. Furthermore, Fred Lampropoulos directly owns US$59m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, roughly 21% of total compensation represents salary and 79% is other remuneration. Merit Medical Systems is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Merit Medical Systems, Inc.'s Growth Numbers
Merit Medical Systems, Inc. has reduced its earnings per share by 69% a year over the last three years. Revenue was pretty flat on last year.
The decline in EPS is a bit concerning. And the flat revenue is seriously uninspiring. 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 Merit Medical Systems, Inc. Been A Good Investment?
Merit Medical Systems, Inc. has generated a total shareholder return of 24% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As we noted earlier, Merit Medical Systems pays its CEO in line with similar-sized companies belonging to the same industry. Merit Medical Systems has had a tough time in recent years, with declining EPS growth, and although shareholder returns are stable, they are hardly worth celebrating. These figures do not go well against CEO compensation, which is more or less equal to the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Merit Medical Systems that investors should be aware of in a dynamic business environment.
Switching gears from Merit Medical Systems, 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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