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Kevin Hoben has been the CEO of Omega Flex, Inc. (NASDAQ:OFLX) since 2005, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Omega Flex pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Omega Flex, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Omega Flex, Inc. has a market capitalization of US$1.3b, and reported total annual CEO compensation of US$2.0m for the year to December 2019. We note that's a decrease of 15% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$445k.
On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$4.8m. That is to say, Kevin Hoben is paid under the industry median. Furthermore, Kevin Hoben directly owns US$123m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. Omega Flex 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 Omega Flex, Inc.'s Growth Numbers
Omega Flex, Inc.'s earnings per share (EPS) grew 3.5% per year over the last three years. It saw its revenue drop 4.4% over the last year.
We would argue that the lack of revenue growth in the last year is less than ideal, but the modest EPS growth gives us some relief. 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Omega Flex, Inc. Been A Good Investment?
Boasting a total shareholder return of 121% over three years, Omega Flex, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we touched on above, Omega Flex, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In contrast, shareholder returns have been excellent over the past three years, and that’s certainly a promising trend to keep an eye on. As a result of the juicy return to investors, CEO compensation may well be quite reasonable.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Omega Flex that investors should be aware of in a dynamic business environment.
Important note: Omega Flex is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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