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In 2013 Brad Mason was appointed CEO of Orthofix Medical Inc. (NASDAQ:OFIX). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Brad Mason's Compensation Compare With Similar Sized Companies?
Our data indicates that Orthofix Medical Inc. is worth US$972m, and total annual CEO compensation is US$5.9m. (This number is for the twelve months until December 2018). Notably, that's an increase of 25% over the year before. We think total compensation is more important but we note that the CEO salary is lower, at US$740k. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.7m.
It would therefore appear that Orthofix Medical Inc. pays Brad Mason more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Orthofix Medical has changed over time.
Is Orthofix Medical Inc. Growing?
Orthofix Medical Inc. has increased its earnings per share (EPS) by an average of 32% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 3.1%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.
Has Orthofix Medical Inc. Been A Good Investment?
With a total shareholder return of 12% over three years, Orthofix Medical Inc. shareholders would, in general, 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.
We compared total CEO remuneration at Orthofix Medical Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. We also note that, over the same time frame, shareholder returns haven't been bad. While it may be worth researching further, we don't see a problem with the CEO pay, given the good EPS growth. Whatever your view on compensation, you might want to check if insiders are buying or selling Orthofix Medical shares (free trial).
Important note: Orthofix Medical may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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 firstname.lastname@example.org. 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.