Shareholders May Not Be So Generous With Surmodics, Inc.'s (NASDAQ:SRDX) CEO Compensation And Here's Why

Shareholders of Surmodics, Inc. (NASDAQ:SRDX) will have been dismayed by the negative share price return over the last three years. 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 10 February 2022. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Surmodics

How Does Total Compensation For Gary Maharaj Compare With Other Companies In The Industry?

At the time of writing, our data shows that Surmodics, Inc. has a market capitalization of US$569m, and reported total annual CEO compensation of US$2.9m for the year to September 2021. We note that's an increase of 12% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$602k.

On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$2.1m. Hence, we can conclude that Gary Maharaj is remunerated higher than the industry median. Furthermore, Gary Maharaj directly owns US$6.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	US$602k	US$585k	20%
Other	US$2.3m	US$2.0m	80%
Total Compensation	US$2.9m	US$2.6m	100%

Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. There isn't a significant difference between Surmodics and the broader market, in terms of salary allocation in the overall compensation package. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Surmodics, Inc.'s Growth Numbers

Surmodics, Inc.'s earnings per share (EPS) grew 47% per year over the last three years. Its revenue is up 11% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent 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 Surmodics, Inc. Been A Good Investment?

With a three year total loss of 22% for the shareholders, Surmodics, Inc. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. 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. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 5 warning signs for Surmodics you should be aware of, and 1 of them doesn't sit too well with us.

Switching gears from Surmodics, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.