Should You Worry About Research Frontiers Incorporated's (NASDAQ:REFR) CEO Salary Level?
Joe Harary has been the CEO of Research Frontiers Incorporated (NASDAQ:REFR) since 2009. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Research Frontiers
How Does Joe Harary's Compensation Compare With Similar Sized Companies?
According to our data, Research Frontiers Incorporated has a market capitalization of US$134m, and paid its CEO total annual compensation worth US$805k over the year to December 2019. Notably, that's an increase of 23% over the year before. While we always look at total compensation first, we note that the salary component is less, at US$500k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$596k.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 36% of total compensation represents salary and 64% is other remuneration. Research Frontiers pays out 62% of aggregate payment in the shape of a salary, which is significantly higher than the industry average.
It would therefore appear that Research Frontiers Incorporated pays Joe Harary more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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 Research Frontiers has changed from year to year.
Is Research Frontiers Incorporated Growing?
Research Frontiers Incorporated has seen earnings per share (EPS) move positively by an average of 6.6% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 1.9%.
I would argue that the improvement in revenue isn't particularly impressive, but I'm happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Research Frontiers Incorporated Been A Good Investment?
Boasting a total shareholder return of 293% over three years, Research Frontiers Incorporated has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
We compared the total CEO remuneration paid by Research Frontiers Incorporated, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
While we generally prefer to see stronger EPS growth, there's no arguing with the strong returns to shareholders, over the last three years. Considering this fine result for investors, we daresay the CEO compensation might be apt. On another note, we've spotted 3 warning signs for Research Frontiers that investors should look into moving forward.
If you want to buy a stock that is better than Research Frontiers, this free list of high return, low debt companies is a great place to look.
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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. Thank you for reading.
