Joshua Levine has been the CEO of Accuray Incorporated (NASDAQ:ARAY) since 2012, 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 Accuray Incorporated's CEO Compensation With the industry
Our data indicates that Accuray Incorporated has a market capitalization of US$350m, and total annual CEO compensation was reported as US$2.9m for the year to June 2020. That's a notable decrease of 37% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$730k.
In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$2.0m. Accordingly, our analysis reveals that Accuray Incorporated pays Joshua Levine north of the industry median. Moreover, Joshua Levine also holds US$2.7m worth of Accuray stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 20% of total compensation represents salary and 80% is other remuneration. Accuray pays out 25% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Accuray Incorporated's Growth Numbers
Over the past three years, Accuray Incorporated has seen its earnings per share (EPS) grow by 79% per year. It saw its revenue drop 8.2% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Accuray Incorporated Been A Good Investment?
Since shareholders would have lost about 20% over three years, some Accuray Incorporated investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we touched on above, Accuray Incorporated is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the company has impressed with its EPS growth, but shareholder returns — over the same period — have been disappointing. Although we'd stop short of calling it inappropriate, we think Joshua is earning a very handsome sum.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 6 warning signs (and 2 which are a bit concerning) in Accuray we think you should know about.
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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