Richard Danforth became the CEO of LRAD Corporation (NASDAQ:LRAD) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Richard Danforth's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that LRAD Corporation has a market cap of US$99m, and is paying total annual CEO compensation of US$588k. (This figure is for the year to September 2018). While we always look at total compensation first, we note that the salary component is less, at US$355k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$498k.
So Richard Danforth receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at LRAD has changed from year to year.
Is LRAD Corporation Growing?
Over the last three years LRAD Corporation has shrunk its earnings per share by an average of 56% per year (measured with a line of best fit). Its revenue is up 6.6% over last year.
Unfortunately, earnings per share have trended lower over the last three years. The fairly low revenue growth fails to impress given that the earnings per share is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has LRAD Corporation Been A Good Investment?
Most shareholders would probably be pleased with LRAD Corporation for providing a total return of 56% 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.
Richard Danforth is paid around the same as most CEOs of similar size companies.
We feel that earnings per share have been a bit disappointing, but it's nice to see positive shareholder returns over the last three years. So we think most shareholders wouldn't be too worried about CEO compensation, which is close to the median for similar sized companies. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at LRAD.
If you want to buy a stock that is better than LRAD, this free list of high return, low debt companies is a great place to look.
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