In 2015 George Kirby was appointed CEO of Ocean Power Technologies Inc (NASDAQ:OPTT). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does George Kirby’s Compensation Compare With Similar Sized Companies?
Our data indicates that Ocean Power Technologies Inc is worth US$10m, and total annual CEO compensation is US$780k. That’s a fairly small increase of 5.2% on year before. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO compensation in that group is US$292k.
It would therefore appear that Ocean Power Technologies Inc pays George Kirby more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Ocean Power Technologies has changed from year to year.
Is Ocean Power Technologies Inc Growing?
On average over the last three years, Ocean Power Technologies Inc has grown earnings per share (EPS) by 76% each year. In the last year, its revenue is down -58%.
This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important.
Although we don’t have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Ocean Power Technologies Inc Been A Good Investment?
Since shareholders would have lost about 85% over three years, some Ocean Power Technologies Inc shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at Ocean Power Technologies Inc with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Ocean Power Technologies Inc.
Or you might prefer examine intently this intuitive graph showing past earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.