Most Shareholders Will Probably Find That The CEO Compensation For Biomerica, Inc. (NASDAQ:BMRA) Is Reasonable
The share price of Biomerica, Inc. (NASDAQ:BMRA) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. The upcoming AGM on 09 December 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
Check out our latest analysis for Biomerica
How Does Total Compensation For Zackary Irani Compare With Other Companies In The Industry?
At the time of writing, our data shows that Biomerica, Inc. has a market capitalization of US$55m, and reported total annual CEO compensation of US$488k for the year to May 2021. Notably, that's an increase of 48% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$137k.
In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$585k. From this we gather that Zackary Irani is paid around the median for CEOs in the industry. What's more, Zackary Irani holds US$4.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2021 | 2020 | Proportion (2021) |
Salary | US$137k | US$137k | 28% |
Other | US$352k | US$194k | 72% |
Total Compensation | US$488k | US$330k | 100% |
On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. According to our research, Biomerica has allocated a higher percentage of pay to salary in comparison to the wider industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Biomerica, Inc.'s Growth
Over the last three years, Biomerica, Inc. has shrunk its earnings per share by 34% per year. It achieved revenue growth of 10% over the last year.
The decline in EPS is a bit concerning. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Biomerica, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Biomerica, Inc. for providing a total return of 66% over three years. 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.
In Summary...
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 4 warning signs for Biomerica that investors should think about before committing capital to this stock.
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.
