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Shareholders may be wondering what CEO Vivek Jain plans to do to improve the less than great performance at ICU Medical, Inc. (NASDAQ:ICUI) recently. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 11 May 2021. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.
Comparing ICU Medical, Inc.'s CEO Compensation With the industry
According to our data, ICU Medical, Inc. has a market capitalization of US$4.4b, and paid its CEO total annual compensation worth US$3.3m over the year to December 2020. That's a notable increase of 17% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$650k.
On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$5.0m. Accordingly, ICU Medical pays its CEO under the industry median. What's more, Vivek Jain holds US$15m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. ICU Medical is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
ICU Medical, Inc.'s Growth
ICU Medical, Inc.'s earnings per share (EPS) grew 5.9% per year over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.
We'd prefer higher revenue growth, but it is good to see modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. 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 ICU Medical, Inc. Been A Good Investment?
With a three year total loss of 20% for the shareholders, ICU Medical, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
The fact that shareholders are sitting on a loss is certainly disheartening. Perhaps the poor price performance may have something to do with the the fact that earnings per share growth has not been performing as strongly either. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for ICU Medical that investors should look into moving forward.
Switching gears from ICU Medical, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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