Investor outrage about excessive executive compensation rears its head from time to time, but STERIS (NYSE:STE) shareholders are unlikely to shake their fists at CEO Walt Rosebrough’s pay package.
That’s because Rosebrough’s pay dropped 29 percent to about $2.2 million in STERIS’ fiscal year ended March 31, 2012, compared with the prior year.
Rosebrough’s base salary remained unchanged at $750,000, but declines in the value of his stock awards and nonequity incentive compensation (bonuses) account for his drop in compensation, according to a regulatory filing from Mentor, Ohio-based STERIS.
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The biggest decline happened in Rosebrough’s nonequity bonus, which fell to 0 from $556,000 in the prior year. That was because the sterilization and infection control products company failed to meet its minimum targets for earnings and free cash flow, according to the document.
STERIS has been struggling the last couple years with the fallout from its flagship product, the System 1, a liquid chemical sterilizing system. The U.S. Food and Drug Administration is requiring customers to transition away from the System 1 because it found in December 2009 that STERIS had made so many changes to the device over the years that the agency hadn’t cleared its modified version.
STERIS has been transitioning customers to a replacement device, the System 1E, but sales have lagged initial projections.
Adjusted net income for 2012 fell slightly to $2.16 per diluted share compared with $2.19 per diluted share in the previous year.
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However, an end to the System 1 saga is in sight as an FDA deadline for STERIS to continue supporting System 1 customers is set for Aug. 2. Rosebrough has called fiscal 2013 a “turning point” for the company.
It’s worth noting that STERIS said its compensation consultant recommended a higher base salary and larger equity rewards than what Rosebrough received, but the CEO turned them down. “At his request, Mr. Rosebrough’s base salary rate has remained unchanged from the time he joined the company,” according to the regulatory filing.
Here’s how Rosebrough’s 2012 compensation of $2.2 million breaks down: base salary ($750,000); stock awards ($541,000); option awards ($798,000); other compensation ($98,000).
A STERIS spokesman didn’t respond to a request for comment.
