Yahoo Finance Shareholders May Be More Conservative With Spectral Medical Inc.'s (TSE:EDT) CEO Compensation For Now
Key Insights
Spectral Medical's Annual General Meeting to take place on 7th of June
CEO Chris Seto's total compensation includes salary of CA$462.0k
The total compensation is 42% higher than the average for the industry
Spectral Medical's EPS declined by 21% over the past three years while total shareholder return over the past three years was 11%
Despite positive share price growth of 11% for Spectral Medical Inc. (TSE:EDT) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 7th of June may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
See our latest analysis for Spectral Medical
Comparing Spectral Medical Inc.'s CEO Compensation With The Industry
Our data indicates that Spectral Medical Inc. has a market capitalization of CA$131m, and total annual CEO compensation was reported as CA$754k for the year to December 2023. That's a notable decrease of 16% on last year. We note that the salary portion, which stands at CA$462.0k constitutes the majority of total compensation received by the CEO.
On comparing similar-sized companies in the Canadian Biotechs industry with market capitalizations below CA$273m, we found that the median total CEO compensation was CA$530k. This suggests that Chris Seto is paid more than the median for the industry. Moreover, Chris Seto also holds CA$294k worth of Spectral Medical stock directly under their own name.
Component | 2023 | 2022 | Proportion (2023) |
Salary | CA$462k | CA$457k | 61% |
Other | CA$292k | CA$445k | 39% |
Total Compensation | CA$754k | CA$901k | 100% |
On an industry level, around 67% of total compensation represents salary and 33% is other remuneration. Although there is a difference in how total compensation is set, Spectral Medical more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Spectral Medical Inc.'s Growth Numbers
Over the last three years, Spectral Medical Inc. has shrunk its earnings per share by 21% per year. It achieved revenue growth of 1.3% over the last year.
The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Spectral Medical Inc. Been A Good Investment?
Spectral Medical Inc. has generated a total shareholder return of 11% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
In Summary...
While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 2 which can't be ignored) in Spectral Medical we think you should know about.
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. 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. Simply Wall St has no position in any stocks mentioned.
