Daniel Baker has been the CEO of NVE Corporation (NASDAQ:NVEC) since 2001, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for NVE
How Does Total Compensation For Daniel Baker Compare With Other Companies In The Industry?
Our data indicates that NVE Corporation has a market capitalization of US$308m, and total annual CEO compensation was reported as US$450k for the year to March 2020. Notably, that's an increase of 13% over the year before. We note that the salary portion, which stands at US$358.8k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$1.7m. That is to say, Daniel Baker is paid under the industry median. Moreover, Daniel Baker also holds US$5.2m worth of NVE 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$359k | US$345k | 80% |
| Other | US$91k | US$53k | 20% |
| Total Compensation | US$450k | US$398k | 100% |
Speaking on an industry level, nearly 14% of total compensation represents salary, while the remainder of 86% is other remuneration. NVE is paying a higher share of its remuneration through a salary in comparison to the overall industry. 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.
NVE Corporation's Growth
Over the last three years, NVE Corporation has shrunk its earnings per share by 3.3% per year. In the last year, its revenue is down 12%.
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 NVE Corporation Been A Good Investment?
With a three year total loss of 15% for the shareholders, NVE Corporation would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
As we noted earlier, NVE pays its CEO lower than the norm for similar-sized companies belonging to the same industry. EPS growth has failed to impress us, and the same can be said about shareholder returns. It's tough to say that Daniel is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for NVE that investors should be aware of in a dynamic business environment.
Switching gears from NVE, 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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Access Free AnalysisThis 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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About NasdaqCM:NVEC
NVE
Develops and sells devices that use spintronics, a nanotechnology that relies on electron spin to acquire, store, and transmit information in the United States and internationally.
Flawless balance sheet with acceptable track record.
