Ron Konezny has been the CEO of Digi International Inc. (NASDAQ:DGII) since 2014. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Ron Konezny's Compensation Compare With Similar Sized Companies?
According to our data, Digi International Inc. has a market capitalization of US$275m, and paid its CEO total annual compensation worth US$2.0m over the year to September 2019. While we always look at total compensation first, we note that the salary component is less, at US$465k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO total compensation of that group was US$1.5m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Digi International. On a sector level, around 27% of total compensation represents salary and 73% is other remuneration. Our data reveals that Digi International allocates salary in line with the wider market.
As you can see, Ron Konezny is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Digi International Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance. The graphic below shows how CEO compensation at Digi International has changed from year to year.
Is Digi International Inc. Growing?
On average over the last three years, Digi International Inc. has shrunk earnings per share by 8.5% each year (measured with a line of best fit). It achieved revenue growth of 4.1% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.
Has Digi International Inc. Been A Good Investment?
Since shareholders would have lost about 22% over three years, some Digi International Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
We examined the amount Digi International Inc. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. Just as bad, share price gains for investors have failed to materialize, over the same period. Some might well form the view that the CEO is paid too generously! Looking into other areas, we've picked out 4 warning signs for Digi International that investors should think about before committing capital to this stock.
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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