Paul Walker has been the CEO of Spectral Medical Inc. (TSE:EDT) since 2001, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Spectral Medical Inc.'s CEO Compensation With the industry
Our data indicates that Spectral Medical Inc. has a market capitalization of CA$98m, and total annual CEO compensation was reported as CA$790k for the year to December 2019. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at CA$449.8k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under CA$263m, the reported median total CEO compensation was CA$347k. This suggests that Paul Walker is paid more than the median for the industry. Moreover, Paul Walker also holds CA$774k worth of Spectral Medical stock directly under their own name.
Speaking on an industry level, nearly 58% of total compensation represents salary, while the remainder of 42% is other remuneration. Our data reveals that Spectral Medical allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Spectral Medical Inc.'s Growth Numbers
Spectral Medical Inc. has reduced its earnings per share by 8.7% a year over the last three years. Its revenue is down 40% over the previous year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Spectral Medical Inc. Been A Good Investment?
With a total shareholder return of 7.8% over three years, Spectral Medical Inc. has done okay by shareholders. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As we noted earlier, Spectral Medical pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, EPS has not grown in three years, failing to impress us. And shareholder returns are decent but not great. So we think more research is needed, but we don't think the CEO is underpaid.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 4 warning signs for Spectral Medical that investors should think about before committing capital to this stock.
Important note: Spectral 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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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.
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