Shareholders May Find It Hard To Justify Increasing Varex Imaging Corporation's (NASDAQ:VREX) CEO Compensation For Now
The underwhelming share price performance of Varex Imaging Corporation (NASDAQ:VREX) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 10 February 2023 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Check out our latest analysis for Varex Imaging
Comparing Varex Imaging Corporation's CEO Compensation With The Industry
According to our data, Varex Imaging Corporation has a market capitalization of US$789m, and paid its CEO total annual compensation worth US$4.5m over the year to September 2022. That's a slight decrease of 4.6% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$715k.
In comparison with other companies in the American Medical Equipment industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$4.7m. From this we gather that Sunny Sanyal is paid around the median for CEOs in the industry. Furthermore, Sunny Sanyal directly owns US$2.0m worth of shares in the company.
Speaking on an industry level, nearly 19% of total compensation represents salary, while the remainder of 81% is other remuneration. Varex Imaging sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Varex Imaging Corporation's Growth
Varex Imaging Corporation has seen its earnings per share (EPS) increase by 40% a year over the past three years. Its revenue is up 3.2% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Varex Imaging Corporation Been A Good Investment?
With a three year total loss of 28% for the shareholders, Varex Imaging Corporation would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Varex Imaging 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. 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.
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