We Think Shareholders Are Less Likely To Approve A Pay Rise For Natus Medical Incorporated's (NASDAQ:NTUS) CEO For Now

The underwhelming share price performance of Natus Medical Incorporated (NASDAQ:NTUS) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 16 June 2021. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Natus Medical

Comparing Natus Medical Incorporated's CEO Compensation With the industry

At the time of writing, our data shows that Natus Medical Incorporated has a market capitalization of US$935m, and reported total annual CEO compensation of US$3.8m for the year to December 2020. That's a notable increase of 14% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$689k.

On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$3.1m. From this we gather that Jonathan Kennedy is paid around the median for CEOs in the industry. Furthermore, Jonathan Kennedy directly owns US$5.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$689k	US$650k	18%
Other	US$3.1m	US$2.7m	82%
Total Compensation	US$3.8m	US$3.3m	100%

Talking in terms of the industry, salary represented approximately 22% of total compensation out of all the companies we analyzed, while other remuneration made up 78% of the pie. In Natus Medical's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Natus Medical Incorporated's Growth Numbers

Natus Medical Incorporated has seen its earnings per share (EPS) increase by 33% a year over the past three years. In the last year, its revenue is down 14%.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in 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 Natus Medical Incorporated Been A Good Investment?

Since shareholders would have lost about 22% over three years, some Natus Medical Incorporated investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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 1 warning sign for Natus Medical that investors should think about before committing capital to this stock.

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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