Here's Why Cardiovascular Systems, Inc.'s (NASDAQ:CSII) CEO Compensation Is The Least Of Shareholders' Concerns

Despite positive share price growth of 8.4% for Cardiovascular Systems, Inc. (NASDAQ:CSII) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 11 November 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Cardiovascular Systems

How Does Total Compensation For Scott Ward Compare With Other Companies In The Industry?

Our data indicates that Cardiovascular Systems, Inc. has a market capitalization of US$1.4b, and total annual CEO compensation was reported as US$4.2m for the year to June 2021. That's a notable decrease of 12% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$665k.

In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$3.4m. From this we gather that Scott Ward is paid around the median for CEOs in the industry. What's more, Scott Ward holds US$20m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	US$665k	US$628k	16%
Other	US$3.5m	US$4.1m	84%
Total Compensation	US$4.2m	US$4.7m	100%

On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. Cardiovascular Systems pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Cardiovascular Systems, Inc.'s Growth Numbers

Over the last three years, Cardiovascular Systems, Inc. has shrunk its earnings per share by 90% per year. Its revenue is up 9.5% over the last year.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Cardiovascular Systems, Inc. Been A Good Investment?

Cardiovascular Systems, Inc. has not done too badly by shareholders, with a total return of 8.4%, over three years. It would be nice to see that metric improve in the future. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

To Conclude...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Cardiovascular Systems (free visualization of insider trades).

Important note: Cardiovascular Systems is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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