Here's Why Shareholders May Consider Paying ProPhase Labs, Inc.'s (NASDAQ:PRPH) CEO A Little More

The decent performance at ProPhase Labs, Inc. (NASDAQ:PRPH) recently will please most shareholders as they go into the AGM coming up on 20 May 2021. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

Check out our latest analysis for ProPhase Labs

Comparing ProPhase Labs, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that ProPhase Labs, Inc. has a market capitalization of US$84m, and reported total annual CEO compensation of US$445k for the year to December 2020. We note that's an increase of 79% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$125k.

In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$732k. Accordingly, ProPhase Labs pays its CEO under the industry median. Furthermore, Ted Karkus directly owns US$13m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 28% of total compensation represents salary and 72% is other remuneration. There isn't a significant difference between ProPhase Labs and the broader market, in terms of salary allocation in the overall compensation package. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ProPhase Labs, Inc.'s Growth

ProPhase Labs, Inc. has reduced its earnings per share by 19% a year over the last three years. Its revenue is up 47% over the last year.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has ProPhase Labs, Inc. Been A Good Investment?

We think that the total shareholder return of 87%, over three years, would leave most ProPhase Labs, 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.

To Conclude...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 4 warning signs for ProPhase Labs that you should be aware of before investing.

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.

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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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