Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!
In 2013 Matt Molchan was appointed CEO of Digirad Corporation (NASDAQ:DRAD). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Matt Molchan's Compensation Compare With Similar Sized Companies?
According to our data, Digirad Corporation has a market capitalization of US$17m, and pays its CEO total annual compensation worth US$638k. (This number is for the twelve months until December 2018). That's actually a decrease on the year before. While we always look at total compensation first, we note that the salary component is less, at US$417k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$427k.
As you can see, Matt Molchan is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Digirad Corporation is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Digirad, below.
Is Digirad Corporation Growing?
Digirad Corporation has reduced its earnings per share by an average of 105% a year, over the last three years (measured with a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the flat revenue hardly impresses. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Digirad Corporation Been A Good Investment?
With a three year total loss of 79%, Digirad Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at Digirad Corporation with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. Some might well form the view that the CEO is paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Digirad (free visualization of insider trades).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.