How Should Investors React To Innovative Solutions and Support's (NASDAQ:ISSC) CEO Pay?

Geoffrey S. Hedrick became the CEO of Innovative Solutions and Support, Inc. (NASDAQ:ISSC) in 2008, 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 Innovative Solutions and Support.

View our latest analysis for Innovative Solutions and Support

Comparing Innovative Solutions and Support, Inc.'s CEO Compensation With the industry

Our data indicates that Innovative Solutions and Support, Inc. has a market capitalization of US$107m, and total annual CEO compensation was reported as US$408k for the year to September 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of US$400.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$470k. From this we gather that Geoffrey S. Hedrick is paid around the median for CEOs in the industry. What's more, Geoffrey S. Hedrick holds US$22m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. Innovative Solutions and Support is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Innovative Solutions and Support, Inc.'s Growth

Over the last three years, Innovative Solutions and Support, Inc. has shrunk its earnings per share by 11% per year. It achieved revenue growth of 23% over the last year.

The decrease in EPS could be a concern for some investors. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Innovative Solutions and Support, Inc. Been A Good Investment?

We think that the total shareholder return of 143%, over three years, would leave most Innovative Solutions and Support, Inc. shareholders smiling. 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...

Geoffrey S. receives almost all of their compensation through a salary. As we touched on above, Innovative Solutions and Support, 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. Investors will be happy that Innovative Solutions and Support has produced strong shareholder returns for the past three years. Meanwhile, revenues have been increasing recently On a sour note, EPS growth has been negative. Overall, the company's performance hasn't been that disappointing for us to object the CEO compensation.

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 3 warning signs for Innovative Solutions and Support that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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