Here's Why Shareholders May Want To Be Cautious With Increasing Computer Programs and Systems, Inc.'s (NASDAQ:CPSI) CEO Pay Packet

By
Simply Wall St
Published
May 06, 2021
NasdaqGS:CPSI

CEO John Douglas has done a decent job of delivering relatively good performance at Computer Programs and Systems, Inc. (NASDAQ:CPSI) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 13 May 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for Computer Programs and Systems

How Does Total Compensation For John Douglas Compare With Other Companies In The Industry?

Our data indicates that Computer Programs and Systems, Inc. has a market capitalization of US$441m, and total annual CEO compensation was reported as US$1.3m for the year to December 2020. That's slightly lower by 7.4% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$630k.

On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$495k. Hence, we can conclude that John Douglas is remunerated higher than the industry median. Furthermore, John Douglas directly owns US$7.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$630k US$630k 49%
Other US$644k US$746k 51%
Total CompensationUS$1.3m US$1.4m100%

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. Computer Programs and Systems is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NasdaqGS:CPSI CEO Compensation May 6th 2021

A Look at Computer Programs and Systems, Inc.'s Growth Numbers

Computer Programs and Systems, Inc.'s earnings per share (EPS) grew 78% per year over the last three years. Its revenue is down 3.7% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Computer Programs and Systems, Inc. Been A Good Investment?

With a total shareholder return of 2.7% over three years, Computer Programs and Systems, Inc. has done okay by shareholders, but there's always room for improvement. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Computer Programs and Systems 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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