Outset Medical, Inc.'s (NASDAQ:OM) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• Outset Medical to hold its Annual General Meeting on 29th of May
• Total pay for CEO Leslie Trigg includes US$723.1k salary
• The overall pay is 161% above the industry average
• Outset Medical's three-year loss to shareholders was 92% while its EPS grew by 3.1% over the past three years

Shareholders of Outset Medical, Inc. (NASDAQ:OM) 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. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 29th of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Outset Medical

How Does Total Compensation For Leslie Trigg Compare With Other Companies In The Industry?

According to our data, Outset Medical, Inc. has a market capitalization of US$202m, and paid its CEO total annual compensation worth US$6.5m over the year to December 2023. Notably, that's an increase of 57% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$723k.

In comparison with other companies in the American Medical Equipment industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$2.5m. Hence, we can conclude that Leslie Trigg is remunerated higher than the industry median. Moreover, Leslie Trigg also holds US$1.3m worth of Outset Medical stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	US$723k	US$661k	11%
Other	US$5.8m	US$3.5m	89%
Total Compensation	US$6.5m	US$4.1m	100%

On an industry level, around 25% of total compensation represents salary and 75% is other remuneration. Outset Medical 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.

Outset Medical, Inc.'s Growth

Outset Medical, Inc.'s earnings per share (EPS) grew 3.1% per year over the last three years. Its revenue is up 5.7% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. 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 Outset Medical, Inc. Been A Good Investment?

With a total shareholder return of -92% over three years, Outset Medical, Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. 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.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Outset Medical (1 doesn't sit too well with us!) that you should be aware of before investing here.

Important note: Outset Medical 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.

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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.