How Does Natural Health Trends' (NASDAQ:NHTC) CEO Pay Compare With Company Performance?

By
Simply Wall St
Published
November 10, 2020

Chris T. Sharng is the CEO of Natural Health Trends Corp. (NASDAQ:NHTC), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether Natural Health Trends pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Natural Health Trends

How Does Total Compensation For Chris T. Sharng Compare With Other Companies In The Industry?

According to our data, Natural Health Trends Corp. has a market capitalization of US$58m, and paid its CEO total annual compensation worth US$1.4m over the year to December 2019. That's a notable decrease of 9.5% on last year. Notably, the salary which is US$1.00m, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$381k. Hence, we can conclude that Chris T. Sharng is remunerated higher than the industry median. Moreover, Chris T. Sharng also holds US$4.8m worth of Natural Health Trends stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20192018Proportion (2019)
Salary US$1.0m US$1.0m 72%
Other US$393k US$540k 28%
Total CompensationUS$1.4m US$1.5m100%

On an industry level, roughly 67% of total compensation represents salary and 33% is other remuneration. Although there is a difference in how total compensation is set, Natural Health Trends more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

NasdaqCM:NHTC CEO Compensation November 10th 2020

Natural Health Trends Corp.'s Growth

Over the last three years, Natural Health Trends Corp. has shrunk its earnings per share by 85% per year. Its revenue is down 49% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Natural Health Trends Corp. Been A Good Investment?

With a three year total loss of 59% for the shareholders, Natural Health Trends Corp. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Chris T. is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. To make matters worse, EPS growth has also been negative during this period. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 1 which shouldn't be ignored) in Natural Health Trends 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. 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.
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