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How Should Investors React To Accuray Incorporated’s (NASDAQ:ARAY) CEO Pay?

Joshua Levine became the CEO of Accuray Incorporated (NASDAQ:ARAY) in 2012. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Accuray

How Does Joshua Levine’s Compensation Compare With Similar Sized Companies?

According to our data, Accuray Incorporated has a market capitalization of US$344m, and pays its CEO total annual compensation worth US$3.4m. (This is based on the year to 2018). That’s below the compensation, last year. While we always look at total compensation first, we note that the salary component is less, at US$710k. We looked at a group of companies with market capitalizations from US$200m to US$800m, and the median CEO compensation was US$1.5m.

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Thus we can conclude that Joshua Levine receives more in total compensation than the median of a group of companies in the same market, and of similar size to Accuray Incorporated. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Accuray, below.

NasdaqGS:ARAY CEO Compensation December 5th 18
NasdaqGS:ARAY CEO Compensation December 5th 18

Is Accuray Incorporated Growing?

Over the last three years Accuray Incorporated has grown its earnings per share (EPS) by an average of 5.5% per year. In the last year, its revenue is up 5.7%.

I’d prefer higher revenue growth, but I’m happy with the modest EPS growth. It’s clear the performance has been quite decent, but it it falls short of outstanding,based on this information.

Shareholders might be interested in this free visualization of analyst forecasts. .

Has Accuray Incorporated Been A Good Investment?

With a three year total loss of 40%, Accuray Incorporated would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We compared the total CEO remuneration paid by Accuray Incorporated, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Although we’d stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Accuray (free visualization of insider trades).

Or you might prefer this data-rich interactive visualization of historic revenue and earnings.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.