Increases to Merit Medical Systems, Inc.'s (NASDAQ:MMSI) CEO Compensation Might Cool off for now

By
Simply Wall St
Published
June 10, 2021
NasdaqGS:MMSI
Source: Shutterstock

The share price of Merit Medical Systems, Inc. (NASDAQ:MMSI) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 17 June 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for Merit Medical Systems

Comparing Merit Medical Systems, Inc.'s CEO Compensation With the industry

Our data indicates that Merit Medical Systems, Inc. has a market capitalization of US$3.4b, and total annual CEO compensation was reported as US$7.7m for the year to December 2020. That's a notable increase of 53% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.7m.

On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$5.5m. Accordingly, our analysis reveals that Merit Medical Systems, Inc. pays Fred Lampropoulos north of the industry median. Moreover, Fred Lampropoulos also holds US$65m worth of Merit Medical Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$1.7m US$1.8m 23%
Other US$6.0m US$3.2m 77%
Total CompensationUS$7.7m US$5.0m100%

Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. Our data reveals that Merit Medical Systems allocates salary more or less in line with the wider market. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NasdaqGS:MMSI CEO Compensation June 11th 2021

Merit Medical Systems, Inc.'s Growth

Over the last three years, Merit Medical Systems, Inc. has shrunk its earnings per share by 40% per year. It saw its revenue drop 3.1% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Merit Medical Systems, Inc. Been A Good Investment?

Merit Medical Systems, Inc. has served shareholders reasonably well, with a total return of 22% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Merit Medical Systems that you should be aware of before investing.

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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