We Discuss Why The CEO Of Omega Flex, Inc. (NASDAQ:OFLX) Is Due For A Pay Rise

Shareholders will be pleased by the impressive results for Omega Flex, Inc. (NASDAQ:OFLX) recently and CEO Kevin Hoben has played a key role. At the upcoming AGM on 09 June 2021, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.

See our latest analysis for Omega Flex

Comparing Omega Flex, Inc.'s CEO Compensation With the industry

According to our data, Omega Flex, Inc. has a market capitalization of US$1.5b, and paid its CEO total annual compensation worth US$2.4m over the year to December 2020. Notably, that's an increase of 21% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$469k.

In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$3.7m. In other words, Omega Flex pays its CEO lower than the industry median. Moreover, Kevin Hoben also holds US$141m worth of Omega Flex stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	US$469k	US$445k	19%
Other	US$2.0m	US$1.6m	81%
Total Compensation	US$2.4m	US$2.0m	100%

On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. Although there is a difference in how total compensation is set, Omega Flex more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Omega Flex, Inc.'s Growth Numbers

Omega Flex, Inc. has seen its earnings per share (EPS) increase by 12% a year over the past three years. In the last year, its revenue is up 1.4%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Omega Flex, Inc. Been A Good Investment?

Boasting a total shareholder return of 129% over three years, Omega Flex, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Omega Flex that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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