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Matt Molchan has been the CEO of Digirad Corporation (NASDAQ:DRAD) since 2013. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Matt Molchan's Compensation Compare With Similar Sized Companies?
Our data indicates that Digirad Corporation is worth US$14m, and total annual CEO compensation is US$638k. (This figure is for the year to December 2018). That's below the compensation, last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$417k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$437k.
As you can see, Matt Molchan is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Digirad Corporation is paying too much. 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 Digirad has changed from year to year.
Is Digirad Corporation Growing?
On average over the last three years, Digirad Corporation has shrunk earnings per share by 95% each year (measured with a line of best fit). In the last year, its revenue is down -13%.
Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Digirad Corporation Been A Good Investment?
Given the total loss of 85% over three years, many shareholders in Digirad Corporation are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We examined the amount Digirad Corporation pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
Arguably worse, investors are without a positive return for the last three years. This analysis suggests to us that the CEO is paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Digirad.
If you want to buy a stock that is better than Digirad, this free list of high return, low debt companies is a great place to look.
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If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.