- Oops!Something went wrong.Please try again later.
This article will reflect on the compensation paid to Fred Kornberg who has served as CEO of Comtech Telecommunications Corp. (NASDAQ:CMTL) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Fred Kornberg Compare With Other Companies In The Industry?
According to our data, Comtech Telecommunications Corp. has a market capitalization of US$545m, and paid its CEO total annual compensation worth US$3.7m over the year to July 2020. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$840k.
On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$1.2m. Accordingly, our analysis reveals that Comtech Telecommunications Corp. pays Fred Kornberg north of the industry median. Moreover, Fred Kornberg also holds US$8.7m worth of Comtech Telecommunications stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 30% of total compensation represents salary and 70% is other remuneration. In Comtech Telecommunications' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Comtech Telecommunications Corp.'s Growth
Over the last three years, Comtech Telecommunications Corp. has shrunk its earnings per share by 62% per year. In the last year, its revenue is down 15%.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Comtech Telecommunications Corp. Been A Good Investment?
With a total shareholder return of 4.2% over three years, Comtech Telecommunications Corp. has done okay by shareholders. 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.
As previously discussed, Fred is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Meanwhile, EPS has not been growing sufficiently to impress us, over the last three years. And shareholder returns are decent but not great. So you can understand why we do not think CEO compensation is particularly modest!
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 1 which is a bit unpleasant) in Comtech Telecommunications we think you should know about.
Important note: Comtech Telecommunications 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.