We Take A Look At Why Profound Medical Corp.'s (TSE:PRN) CEO Compensation Is Well Earned

It would be hard to discount the role that CEO Arun Menawat has played in delivering the impressive results at Profound Medical Corp. (TSE:PRN) recently. Coming up to the next AGM on 19 May 2021, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

View our latest analysis for Profound Medical

How Does Total Compensation For Arun Menawat Compare With Other Companies In The Industry?

Our data indicates that Profound Medical Corp. has a market capitalization of CA$443m, and total annual CEO compensation was reported as US$2.3m for the year to December 2020. Notably, that's an increase of 49% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.

For comparison, other companies in the same industry with market capitalizations ranging between CA$242m and CA$968m had a median total CEO compensation of US$1.9m. From this we gather that Arun Menawat is paid around the median for CEOs in the industry. What's more, Arun Menawat holds CA$5.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	US$1.1m	US$531k	46%
Other	US$1.3m	US$1.0m	54%
Total Compensation	US$2.3m	US$1.6m	100%

Talking in terms of the industry, salary represented approximately 69% of total compensation out of all the companies we analyzed, while other remuneration made up 31% of the pie. In Profound Medical's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Profound Medical Corp.'s Growth Numbers

Over the past three years, Profound Medical Corp. has seen its earnings per share (EPS) grow by 24% per year. Its revenue is up 75% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Profound Medical Corp. Been A Good Investment?

Boasting a total shareholder return of 113% over three years, Profound Medical Corp. has done well by shareholders. 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...

Seeing that company performance has been quite good recently, some shareholders may feel that CEO compensation may not be the biggest focus in the upcoming AGM. In saying that, some shareholders may feel that the more important issues to be addressed may be how the management plans to steer the company towards sustainable profitability in the future.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Profound Medical that investors should look into moving forward.

Important note: Profound Medical 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.

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