How Much Is Digirad Corporation (NASDAQ:DRAD) Paying Its CEO?

Matt Molchan has been the CEO of Digirad Corporation (NASDAQ:DRAD) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Digirad pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Digirad

How Does Total Compensation For Matt Molchan Compare With Other Companies In The Industry?

Our data indicates that Digirad Corporation has a market capitalization of US$13m, and total annual CEO compensation was reported as US$810k for the year to December 2019. We note that's an increase of 27% above last year. In particular, the salary of US$416.8k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$427k. Accordingly, our analysis reveals that Digirad Corporation pays Matt Molchan north of the industry median. Furthermore, Matt Molchan directly owns US$76k worth of shares in the company.

On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. It's interesting to note that Digirad pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Digirad Corporation's Growth Numbers

Digirad Corporation has seen its earnings per share (EPS) increase by 63% a year over the past three years. In the last year, its revenue is up 13%.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Digirad Corporation Been A Good Investment?

Since shareholders would have lost about 87% over three years, some Digirad Corporation investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As previously discussed, Matt is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth is certainly impressive, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for Digirad (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

Switching gears from Digirad, 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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