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Shareholders of Natus Medical Incorporated (NASDAQ:NTUS) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 16 June 2021. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.
How Does Total Compensation For Jonathan Kennedy Compare With Other Companies In The Industry?
According to our data, Natus Medical Incorporated has a market capitalization of US$935m, and paid its CEO total annual compensation worth US$3.8m over the year to December 2020. Notably, that's an increase of 14% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$689k.
In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$3.1m. So it looks like Natus Medical compensates Jonathan Kennedy in line with the median for the industry. Furthermore, Jonathan Kennedy directly owns US$5.3m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. Natus Medical sets aside a smaller share of compensation for 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.
Natus Medical Incorporated's Growth
Natus Medical Incorporated has seen its earnings per share (EPS) increase by 33% a year over the past three years. It saw its revenue drop 14% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Natus Medical Incorporated Been A Good Investment?
Since shareholders would have lost about 22% over three years, some Natus Medical Incorporated investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Natus Medical that investors should think about before committing capital to this stock.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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