Increases to Conformis, Inc.'s (NASDAQ:CFMS) CEO Compensation Might Cool off for now

In the past three years, the share price of Conformis, Inc. (NASDAQ:CFMS) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 24 May 2021. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Conformis

Comparing Conformis, Inc.'s CEO Compensation With the industry

Our data indicates that Conformis, Inc. has a market capitalization of US$150m, and total annual CEO compensation was reported as US$1.7m for the year to December 2020. That's a notable decrease of 42% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$552k.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$567k. This suggests that Mark Augusti is paid more than the median for the industry. What's more, Mark Augusti holds US$1.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	US$552k	US$536k	33%
Other	US$1.1m	US$2.3m	67%
Total Compensation	US$1.7m	US$2.9m	100%

Speaking on an industry level, nearly 21% of total compensation represents salary, while the remainder of 79% is other remuneration. It's interesting to note that Conformis pays out a greater portion of remuneration through salary, compared to the industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Conformis, Inc.'s Growth Numbers

Over the past three years, Conformis, Inc. has seen its earnings per share (EPS) grow by 42% per year. In the last year, its revenue is down 9.7%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Conformis, Inc. Been A Good Investment?

The return of -38% over three years would not have pleased Conformis, Inc. shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for Conformis you should be aware of, and 2 of them are a bit unpleasant.

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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