Shareholders May Be A Bit More Conservative With Cytosorbents Corporation's (NASDAQ:CTSO) CEO Compensation For Now

Shareholders of Cytosorbents Corporation (NASDAQ:CTSO) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 01 June 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Cytosorbents

How Does Total Compensation For Phil Chan Compare With Other Companies In The Industry?

According to our data, Cytosorbents Corporation has a market capitalization of US$353m, and paid its CEO total annual compensation worth US$1.4m over the year to December 2020. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$456k.

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$1.6m. This suggests that Cytosorbents remunerates its CEO largely in line with the industry average. Moreover, Phil Chan also holds US$3.7m worth of Cytosorbents stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	US$456k	US$438k	33%
Other	US$933k	US$966k	67%
Total Compensation	US$1.4m	US$1.4m	100%

Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. It's interesting to note that Cytosorbents pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Cytosorbents Corporation's Growth Numbers

Over the past three years, Cytosorbents Corporation has seen its earnings per share (EPS) grow by 16% per year. In the last year, its revenue is up 51%.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Cytosorbents Corporation Been A Good Investment?

Since shareholders would have lost about 29% over three years, some Cytosorbents Corporation investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. 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 be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Cytosorbents that you should be aware of before investing.

Switching gears from Cytosorbents, 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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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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