Is BioSpecifics Technologies Corp. (NASDAQ:BSTC) Overpaying Its CEO?

Thomas Wegman has been the CEO of BioSpecifics Technologies Corp. (NASDAQ:BSTC) since 2007. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

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How Does Thomas Wegman's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that BioSpecifics Technologies Corp. has a market cap of US$447m, and is paying total annual CEO compensation of US$403k. (This number is for the twelve months until 2017). It is worth noting that the CEO compensation consists almost entirely of the salary, worth US$400k. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO compensation of that group was US$1.6m.

Most shareholders would consider it a positive that Thomas Wegman takes less compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance. So this freereport on the analyst consensus forecasts could help you make a master move on this stock.

You can see a visual representation of the CEO compensation at BioSpecifics Technologies, below.

Is BioSpecifics Technologies Corp. Growing?

On average over the last three years, BioSpecifics Technologies Corp. has grown earnings per share (EPS) by 12% each year (using a line of best fit). In the last year, its revenue is up 8.9%.

This demonstrates that the company has been improving recently. A good result. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably.

Has BioSpecifics Technologies Corp. Been A Good Investment?

Most shareholders would probably be pleased with BioSpecifics Technologies Corp. for providing a total return of 58% over three years. 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...

It looks like BioSpecifics Technologies Corp. pays its CEO less than similar sized companies. Many would consider this to indicate that the pay is modest since the business is growing. And given most shareholders are probably very happy with recent returns, you might even think that Thomas Wegman deserves a raise!

It is relatively rare to see a modestly paid CEO when performance is so impressive. It would be even more positive if company insiders are buying shares. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at BioSpecifics Technologies.

Important note: BioSpecifics Technologies may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.