Owens & Minor, Inc.'s (NYSE:OMI) CEO Might Not Expect Shareholders To Be So Generous This Year

Key Insights

• Owens & Minor will host its Annual General Meeting on 9th of May
• Salary of US$1.00m is part of CEO Ed Pesicka's total remuneration
• The overall pay is comparable to the industry average
• Owens & Minor's EPS declined by 81% over the past three years while total shareholder loss over the past three years was 27%

The results at Owens & Minor, Inc. (NYSE:OMI) have been quite disappointing recently and CEO Ed Pesicka bears some responsibility for this. At the upcoming AGM on 9th of May, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Owens & Minor

How Does Total Compensation For Ed Pesicka Compare With Other Companies In The Industry?

At the time of writing, our data shows that Owens & Minor, Inc. has a market capitalization of US$1.8b, and reported total annual CEO compensation of US$8.4m for the year to December 2023. We note that's an increase of 34% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.

On examining similar-sized companies in the American Healthcare industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$6.7m. From this we gather that Ed Pesicka is paid around the median for CEOs in the industry. Moreover, Ed Pesicka also holds US$20m worth of Owens & Minor stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 20% of total compensation represents salary and 80% is other remuneration. It's interesting to note that Owens & Minor allocates a smaller portion of compensation to salary 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.

Owens & Minor, Inc.'s Growth

Over the last three years, Owens & Minor, Inc. has shrunk its earnings per share by 81% per year. Its revenue is up 3.8% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Owens & Minor, Inc. Been A Good Investment?

With a three year total loss of 27% for the shareholders, Owens & Minor, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Owens & Minor that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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.