Shareholders Will Probably Not Have Any Issues With Penumbra, Inc.'s (NYSE:PEN) CEO Compensation

Performance at Penumbra, Inc. (NYSE:PEN) has been rather uninspiring recently and shareholders may be wondering how CEO Adam Elsesser plans to fix this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 02 June 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. In our opinion, CEO compensation does not look excessive and we discuss why.

Check out our latest analysis for Penumbra

How Does Total Compensation For Adam Elsesser Compare With Other Companies In The Industry?

At the time of writing, our data shows that Penumbra, Inc. has a market capitalization of US$9.0b, and reported total annual CEO compensation of US$219k for the year to December 2020. That's a notable decrease of 70% on last year. Notably, the salary which is US$217.2k, represents most of the total compensation being paid.

For comparison, other companies in the same industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$6.5m. That is to say, Adam Elsesser is paid under the industry median. Moreover, Adam Elsesser also holds US$237m worth of Penumbra stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	US$217k	US$725k	99%
Other	US$1.8k	US$1.7k	1%
Total Compensation	US$219k	US$727k	100%

Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. Penumbra pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Penumbra, Inc.'s Growth Numbers

Over the last three years, Penumbra, Inc. has shrunk its earnings per share by 34% per year. In the last year, its revenue is up 6.5%.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Penumbra, Inc. Been A Good Investment?

We think that the total shareholder return of 54%, over three years, would leave most Penumbra, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Penumbra pays its CEO a majority of compensation through a salary. Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean these strong returns may not continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for 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. That's why we did some digging and identified 1 warning sign for Penumbra that investors should think about before committing capital to this stock.

Switching gears from Penumbra, 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.

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