In 2013 Matt Molchan was appointed CEO of Digirad Corporation (NASDAQ:DRAD). 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. 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?
At the time of writing our data says that Digirad Corporation has a market cap of US$9.2m, and is paying total annual CEO compensation of US$638k. (This number is for the twelve months until December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$417k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$492k.
That means Matt Molchan receives fairly typical remuneration for the CEO of a company that size. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see, below, how CEO compensation at Digirad has changed over time.
Is Digirad Corporation Growing?
On average over the last three years, Digirad Corporation has shrunk earnings per share by 73% each year (measured with a line of best fit). It saw its revenue drop -3.2% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.
Has Digirad Corporation Been A Good Investment?
Since shareholders would have lost about 90% over three years, some Digirad Corporation shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
Matt Molchan is paid around what is normal the leaders of comparable size companies.
The company isn’t growing EPS, and shareholder returns have been disappointing. Few would argue that it’s wise for the company to pay any more, before returns improve. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Digirad (free visualization of insider trades).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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