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Is VirnetX Holding Corp's (NYSEMKT:VHC) CEO Overpaid Relative To Its Peers?

Simply Wall St

Kendall Larsen has been the CEO of VirnetX Holding Corp (NYSEMKT:VHC) since 2007. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for VirnetX Holding

How Does Kendall Larsen's Compensation Compare With Similar Sized Companies?

According to our data, VirnetX Holding Corp has a market capitalization of US$275m, and paid its CEO total annual compensation worth US$1.9m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$697k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$1.1m.

Thus we can conclude that Kendall Larsen receives more in total compensation than the median of a group of companies in the same market, and of similar size to VirnetX Holding Corp. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at VirnetX Holding has changed from year to year.

AMEX:VHC CEO Compensation, December 23rd 2019

Is VirnetX Holding Corp Growing?

On average over the last three years, VirnetX Holding Corp has grown earnings per share (EPS) by 12% each year (using a line of best fit). Its revenue is down 80% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has VirnetX Holding Corp Been A Good Investment?

Boasting a total shareholder return of 72% over three years, VirnetX Holding Corp has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

We compared total CEO remuneration at VirnetX Holding Corp 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, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. So you may want to check if insiders are buying VirnetX Holding shares with their own money (free access).

If you want to buy a stock that is better than VirnetX Holding, this free list of high return, low debt companies is a great place to look.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

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. Thank you for reading.