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Randy Lipps became the CEO of Omnicell, Inc. (NASDAQ:OMCL) in 2002, 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 Omnicell.
Comparing Omnicell, Inc.'s CEO Compensation With the industry
Our data indicates that Omnicell, Inc. has a market capitalization of US$2.9b, and total annual CEO compensation was reported as US$7.2m for the year to December 2019. That's a notable increase of 14% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$711k.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$4.2m. This suggests that Randy Lipps is paid more than the median for the industry. What's more, Randy Lipps holds US$29m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. It's interesting to note that Omnicell allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Omnicell, Inc.'s Growth Numbers
Omnicell, Inc.'s earnings per share (EPS) grew 40% per year over the last three years. In the last year, its revenue is up 8.4%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Omnicell, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Omnicell, Inc. for providing a total return of 34% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As previously discussed, Randy is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Importantly though, earnings per share growth and shareholder returns are very impressive over the last three years. So, in acknowledgment of the overall excellent performance, we believe CEO compensation is appropriate. And given most shareholders are probably very happy with recent returns, they might even think that Randy deserves a raise!
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 Omnicell that investors should be aware of in a dynamic business environment.
Important note: Omnicell 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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