Why BIO-key International's (NASDAQ:BKYI) CEO Pay Matters
Mike DePasquale has been the CEO of BIO-key International, Inc. (NASDAQ:BKYI) since 2003, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for BIO-key International.
See our latest analysis for BIO-key International
Comparing BIO-key International, Inc.'s CEO Compensation With the industry
Our data indicates that BIO-key International, Inc. has a market capitalization of US$26m, and total annual CEO compensation was reported as US$311k for the year to December 2019. That's a slight decrease of 6.7% on the prior year. In particular, the salary of US$275.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$516k. In other words, BIO-key International pays its CEO lower than the industry median.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$275k | US$275k | 89% |
Other | US$36k | US$58k | 11% |
Total Compensation | US$311k | US$333k | 100% |
Speaking on an industry level, nearly 11% of total compensation represents salary, while the remainder of 89% is other remuneration. It's interesting to note that BIO-key International pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
BIO-key International, Inc.'s Growth
Over the last three years, BIO-key International, Inc. has shrunk its earnings per share by 2.2% per year. In the last year, its revenue is down 51%.
Its a bit disappointing to see that the company has failed to grow its EPS. This is compounded by the fact revenue is actually down on last 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 BIO-key International, Inc. Been A Good Investment?
Since shareholders would have lost about 83% over three years, some BIO-key International, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
As we touched on above, BIO-key International, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. EPS growth has failed to impress us, and the same can be said about shareholder returns. It's tough to say that Mike is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 1 which shouldn't be ignored) in BIO-key International we think you should know about.
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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