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Why VirTra's (NASDAQ:VTSI) CEO Pay Matters

This article will reflect on the compensation paid to Bob Ferris who has served as CEO of VirTra, Inc. (NASDAQ:VTSI) since 2008. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for VirTra

How Does Total Compensation For Bob Ferris Compare With Other Companies In The Industry?

Our data indicates that VirTra, Inc. has a market capitalization of US$27m, and total annual CEO compensation was reported as US$279k for the year to December 2019. Notably, that's a decrease of 25% over the year before. In particular, the salary of US$241.5k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$429k. Accordingly, VirTra pays its CEO under the industry median. What's more, Bob Ferris holds US$1.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2019

2018

Proportion (2019)

Salary

US$242k

US$234k

86%

Other

US$38k

US$137k

14%

Total Compensation

US$279k

US$371k

100%

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. It's interesting to note that VirTra pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ceo-compensation

A Look at VirTra, Inc.'s Growth Numbers

Over the last three years, VirTra, Inc. has shrunk its earnings per share by 84% per year. In the last year, its revenue is up 53%.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 VirTra, Inc. Been A Good Investment?

Since shareholders would have lost about 29% over three years, some VirTra, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, VirTra pays its CEO lower than the norm for similar-sized companies belonging to the same industry. But poor shareholder returns EPS growth have hampered the company over the past three years. In contrast, revenues have increased more recently. Although it's fair to say CEO compensation is modest, shareholders might want to see healthier investor returns before thinking Bob deserves a raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for VirTra that you should be aware of before investing.

Important note: VirTra is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

This 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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