Stock Analysis

Here's Why We Think AtriCure, Inc.'s (NASDAQ:ATRC) CEO Compensation Looks Fair for the time being

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Despite strong share price growth of 194% for AtriCure, Inc. (NASDAQ:ATRC) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 20 May 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for AtriCure

How Does Total Compensation For Mike Carrel Compare With Other Companies In The Industry?

According to our data, AtriCure, Inc. has a market capitalization of US$3.2b, and paid its CEO total annual compensation worth US$5.6m over the year to December 2020. That's slightly lower by 4.5% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$718k.

For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.5m. So it looks like AtriCure compensates Mike Carrel in line with the median for the industry. What's more, Mike Carrel holds US$35m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$718k US$740k 13%
Other US$4.9m US$5.1m 87%
Total CompensationUS$5.6m US$5.8m100%

Speaking on an industry level, nearly 20% of total compensation represents salary, while the remainder of 80% is other remuneration. It's interesting to note that AtriCure allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

NasdaqGM:ATRC CEO Compensation May 14th 2021

AtriCure, Inc.'s Growth

Over the last three years, AtriCure, Inc. has shrunk its earnings per share by 26% per year. Its revenue is down 7.6% over the previous year.

Few shareholders would be pleased to read that EPS have declined. 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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has AtriCure, Inc. Been A Good Investment?

We think that the total shareholder return of 194%, over three years, would leave most AtriCure, 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.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for AtriCure that investors should think about before committing capital to this stock.

Switching gears from AtriCure, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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