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Why Harrow Health's (NASDAQ:HROW) CEO Pay Matters

Simply Wall St

Mark Baum became the CEO of Harrow Health, Inc. (NASDAQ:HROW) in 2012, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Harrow Health.

View our latest analysis for Harrow Health

Comparing Harrow Health, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that Harrow Health, Inc. has a market capitalization of US$163m, and reported total annual CEO compensation of US$1.4m for the year to December 2019. Notably, that's an increase of 30% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$489k.

On examining similar-sized companies in the industry with market capitalizations between US$100m and US$400m, we discovered that the median CEO total compensation of that group was US$1.7m. This suggests that Harrow Health remunerates its CEO largely in line with the industry average. Furthermore, Mark Baum directly owns US$4.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

US$489k

US$411k

35%

Other

US$888k

US$646k

65%

Total Compensation

US$1.4m

US$1.1m

100%

On an industry level, around 24% of total compensation represents salary and 76% is other remuneration. Harrow Health is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

Harrow Health, Inc.'s Growth

Harrow Health, Inc.'s earnings per share (EPS) grew 31% per year over the last three years. It saw its revenue drop 5.7% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Harrow Health, Inc. Been A Good Investment?

We think that the total shareholder return of 308%, over three years, would leave most Harrow Health, Inc. shareholders smiling. 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.

To Conclude...

As we touched on above, Harrow Health, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Few would be critical of the leadership, since returns have been juicy and EPS are moving in the right direction. Indeed, many might consider that Mark is compensated rather modestly, given the solid company performance! Stockholders might even be okay with a bump in pay, seeing as how investor returns have been so strong.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Harrow Health that investors should be aware of in a dynamic business environment.

Important note: Harrow Health is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.