Stock Analysis

Here's Why Shareholders May Want To Be Cautious With Increasing Neuronetics, Inc.'s (NASDAQ:STIM) CEO Pay Packet

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Key Insights

  • Neuronetics will host its Annual General Meeting on 30th of May
  • Total pay for CEO Keith Sullivan includes US$700.0k salary
  • Total compensation is 366% above industry average
  • Neuronetics' three-year loss to shareholders was 84% while its EPS grew by 1.8% over the past three years

Shareholders of Neuronetics, Inc. (NASDAQ:STIM) 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 30th of May. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. 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 Neuronetics

How Does Total Compensation For Keith Sullivan Compare With Other Companies In The Industry?

According to our data, Neuronetics, Inc. has a market capitalization of US$71m, and paid its CEO total annual compensation worth US$3.0m over the year to December 2023. We note that's an increase of 22% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$700k.

In comparison with other companies in the American Medical Equipment industry with market capitalizations under US$200m, the reported median total CEO compensation was US$642k. Hence, we can conclude that Keith Sullivan is remunerated higher than the industry median. Furthermore, Keith Sullivan directly owns US$1.5m worth of shares in the company.

Component20232022Proportion (2023)
Salary US$700k US$676k 23%
Other US$2.3m US$1.8m 77%
Total CompensationUS$3.0m US$2.5m100%

Speaking on an industry level, nearly 25% of total compensation represents salary, while the remainder of 75% is other remuneration. Although there is a difference in how total compensation is set, Neuronetics more or less reflects the market in terms of setting the salary. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

NasdaqGM:STIM CEO Compensation May 24th 2024

A Look at Neuronetics, Inc.'s Growth Numbers

Neuronetics, Inc. has seen its earnings per share (EPS) increase by 1.8% a year over the past three years. It achieved revenue growth of 10% over the last year.

This revenue growth could really point to a brighter future. And, while modest, the EPS growth is noticeable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Neuronetics, Inc. Been A Good Investment?

With a total shareholder return of -84% over three years, Neuronetics, Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 5 warning signs for Neuronetics that investors should be aware of in a dynamic business environment.

Important note: Neuronetics 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.

Valuation is complex, but we're helping make it simple.

Find out whether Neuronetics is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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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.