Varex Imaging Corporation's (NASDAQ:VREX) CEO Might Not Expect Shareholders To Be So Generous This Year

Varex Imaging Corporation (NASDAQ:VREX) has not performed well recently and CEO Sunny Sanyal will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 10 February 2022. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Varex Imaging

How Does Total Compensation For Sunny Sanyal Compare With Other Companies In The Industry?

At the time of writing, our data shows that Varex Imaging Corporation has a market capitalization of US$1.0b, and reported total annual CEO compensation of US$4.7m for the year to October 2021. We note that's an increase of 19% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$637k.

On examining similar-sized companies in the industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$2.7m. Accordingly, our analysis reveals that Varex Imaging Corporation pays Sunny Sanyal north of the industry median. Furthermore, Sunny Sanyal directly owns US$1.9m worth of shares in the company.

Component	2021	2020	Proportion (2021)
Salary	US$637k	US$585k	14%
Other	US$4.1m	US$3.3m	86%
Total Compensation	US$4.7m	US$3.9m	100%

On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. Varex Imaging pays a modest slice of remuneration through salary, as compared 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 Varex Imaging Corporation's Growth Numbers

Over the last three years, Varex Imaging Corporation has shrunk its earnings per share by 15% per year. In the last year, its revenue is up 11%.

The decline in EPS is a bit concerning. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Varex Imaging Corporation Been A Good Investment?

Given the total shareholder loss of 19% over three years, many shareholders in Varex Imaging Corporation are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which is concerning) in Varex Imaging we think you should know about.

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. 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.