CEO RK's Performance

The level of compensation for a CEO in this size of company, is truly unprecedented. It really makes you call into question the logic of the Board, and perhaps what their own interest is in all of this.

 

THe company's stock price under RK had reached a high of $5.40 not too long ago, but fell sharply after showing poor results of about flat to declining sequential sales in the U.S. of UrgentPC in spite of continued large increase in covered lives by Medicare and other insurance companies. Now the company is telling RK that he can share in a $3.5 million bonus if he brings the stock price to $5.50, only marginally better than where it had gotten to not too long ago. So basically RK is being told that you screwed up, but that is OK if you fix your screw up and we will reward you richly for fixing your screw up.

IMO, something seems awfully wrong with this picture. I have not heard of people being rewarded for fixing their own screw ups.

 

This is a bigger sweetheart deal for RK than you seem to be aware of. Looks like you did not fully read all the fine print.

RK has 5 years to get the stock price to $5.50. Think about that: 5 years. The stock price hit a 52-week high of $5.40 a few months ago, so technically he has more than 5 years to fix his, as you say it, "screw up," to share in the big bonus the Board promised him.

And how big is his screw up. Let us put it in perspective. Today the stock price is about 50 to 60% below the 52-week high of $5.40, for a loss of about $60+ million in shareholder wealth. Much of the decline occurred in early January after the announcement of the disappointing results for the December quarter.

If I make such a big screw up, I get fired, not rewarded so richly, and certainly I do not get 5+ years to fix my screw up.

RK sure got a sweetheart deal, this even after the shareholders rejected RK's compensation package earlier. Looks like that message has not yet sunk in with the Board.

 

He cant lose actually. it is definitely a position with enough "sweetheart" clauses that will keep him whole during times of troubling company performance and personal F#$% ups on his part...if we all were so lucky to have that kind of employment arrangement!

 

RK's ultimate performance is measured by the value he creates for the shareholders, which today has declined by about 50% to 60% from a few months ago where it had reached a 52-week high.

My performance is measured by the sales in my territory.

Here is a multiple choice question for you:

If my performance declines by 50% to 60%, what do you think would happen to me?

(a) I would be given 5 years to fix my f**k up
(b) As an inducement to retain me, I would be promised a bonus when I fix my f**k up
(c) I would get an immediate 25% pay raise, commensurate with what companies about 3 times larger pay their employees
(d) I would be considered to have turned around the company by those who have been drinking my Kool aid
(e) All of the above
(f) None of the above

Hint: For RK's performance the correct answer is (e)

 

Did you realize that taking the stock price from a previous 52-week high of $5.10 to $5.50 in 5+ years gives the shareholders a return of less than 1.5% per year on their investment. And for this minuscule return RK is promised a big bonus. Those seem very low expectations set for RK. I wish my bonus earning expectations were set equally low. I guess there are two standards in the company, one for RK and another for us minions, but then we are told that we are making a "good living," so we should not complain.

 

Quite frankly, if you are making a six figure income here, you should be pleased and consider yourself fortunate. If you do not like it, leave. Your value here is detrimental to our organizations success when all that can be expected from you, is complaining. Please understand that the leadership of this company is rewarded for growing the revenue line, but also by rewarding top performers achievements. Please stop questioning the performance or the compensation of those of us that take care of you "minions". Thank you

 

I have followed a lot of discussion on this board, some insightful, some a bit off the chart criticizing or defending the company and its management, but none gives me insight on an underlying question

between medicare and private pay the company (1) has 40 million more covered lives than six months ago, (2) has a 43-person well trained, motivated rep organization that is about 25% bigger than 6 months ago's 34-person rep organization consisting of poorly trained and, we are told, full of slackers, and (3) has 9 clinical reps to boot

yet september quarter UpC sales in the US increased only by about 7 percent from the six months ago march quarter sales. with that kind of a sales boost trend line, it is going to take a long, long time, if ever, to get a paybcack on this investment in the sales organization

but I think the bigger question is why the sales growth is very substantially lagging the important sales drivers: the very substantial growth of a better-trained sales organization, and the very substantial increase in covered lives

anybody care to venture on the what is causing this?

need honest discussion, not name calling, rehashing of actual or imagined grievances, or general statements made elsewhere on this board about how hardworking everybody is, especially top management. if you want to spew hatred or go off topic please go elsewhere, as that will not help answer the underlying question

 

Its really simple...coverage...coverage....coverage.. Uroplasty will never get BC/BS in the SE where it is really needed and reimbursement rates with the CPT code, with all payers, will never be where they once were. Uroplasty is a sinking ship with even worse management than before. The C level guys want one thing...TO BE SOLD...be warned...your time is up soon!
Just look at the stock price that never moves..

 

I will disregard what appears to be bitter comments from you about the company's management

I agree with your point that coverage is critical, but the company added 40 million lives in the last six months without much discernable impact on sales during that period, even though the sales organization during that period got bigger and, supposedly, is better trained…..there is some other missing factor(s) that is holding back the company from capitalizing on the already significant coverage it has

as to your comment about the performance of the stock price, I agree with you. check out this chart showing the performance over the last 9 month

http://finance.yahoo.com/echarts?s=UPI+Interactive#%7B%22range%22%3A%7B%22start%22%3A%222014-01-28T18%3A00%3A00.000Z%22%2C%22end%22%3A%222014-11-06T18%3A00%3A00.000Z%22%7D%2C%22scale%22%3A%22linear%22%7D

 

I do agree that the stock performance over the past 9 months has been insulting to shareholders given the robust comp increases seen by senior leadership. If it walks like a duck...

 

I am one of the newer reps, and here is my take, hopefully coming out as stated without bitterness, on why the company sales are lagging considerably the considerable expansion of the sales organization, the better training, tools and support for the sale organization, and the whopping increase in the number of covered lives in this very large market.

I think the reimbursement amount for the treatment is not sufficient to excite the Docs to make this treatment a main stay of their practice. The hassles just do not make this treatment very exciting for them. I know, I know that the Docs should be looking at 12 treatments (plus maintenance treatments thereafter), but still they view it as twelve hassles for not sufficient payback to justify making this treatment a main stay in their practice. While some Docs in my territory have incorporated this treatment successfully in their practice, I think that is an exception rather than a rule given the large number of Urology and UroGyne practices in the country. Let us face it, and let us not be naive, money drives the motivation of the Docs. The insufficient reimbursement amount makes it difficult to capitalize on the substantial increase in the number of covered lives.

We have been told that the past experience with the back-and-forth with coverage is impacting the uptick in the business. Yes, that is true, but my experience is that this is impacting only at the margins. The bigger nut remains the insufficient reimbursement amount. And that problem will get worse in the future as reimbursement amount continues to be squeezed from an already low amount to start with. It is unclear to me how expanding to fecal incontinence, where the company has embarked with clinical studies, will solve the problem of insufficient reimbursement amount to make this an enticing treatment for widespread incorporation in the practices.

Would the more money-hungry Gynes be more accepting to incorporate this treatment in their practice -- at the margins, yes, but needs to be proven for widespread incorporation. Could nursing homes provide a better opportunity -- very likely, but we may need to partner with or turn a blind eye to many of the unsavory characters in this business, and reimbursement will be an even bigger challenge in this market?

Even with all this, the question remains: Can I still earn sufficient to make a decent living working here? For the time being, yes. In the future: It depends on the growth I am expected to deliver. If the Company recognizes that barn-burner growth is not possible, as is typical of start-up medical device companies, then there is a possibility we will all continue to make a reasonable, but definitely not a barn-burner living. Would the shareholders be happy with a less than barn-burner growth? That remains to be seen, but the stock price performance in the last 9 months has not been a good omen.

This is my 25 cents worth of observations. I do not claim to be a know-it-all person, and I am sure the veterans, to whom I would rather defer, have a much better picture of the long term potential of this business.

 

All well stated but...Uroplasty is no longer considered a start-up. It is is past that plateau in its curve and should be accelerating at a faster growth clip. its needs to mindful of how it comps it reps

 

Very well said. As a more senior rep, I find the biggest issue the company seems to miss is space. this is two fold, one a practice can book three patients for check ups in the time it takes to do one UPC procedure. two, if a practice adopts UPC and has 50 or so patients on maintenance time slots become an issue. These Urology practices are so busy, they can not handle the patient load. Another huge issue is that many docs feel OAB is "just getting old" and tell their patients to deal with it. We only get the ones who complain too much or are such train wrecks that nothing will work. Botox and interstim are done in the surgery center and do not have the same scheduling issues as UPC.

My 25 cents

 

I do not consider myself a veteran, but I am not a rookie either. My observation is that many docs consider the reimbursement amount to be low and so are unwilling to adopt this in their practice in the first place, and many of those that do adopt it, find the space management issue to be too bothersome to expand the treatment to more patients. What then happens is that the adoption gradually dies off in that practice or the usage declines considerably. Of course, the good rep I am, to avoid this constant customer churn, I make all kinds of suggestions to overcome their space management constraints. But for such people there is just not enough money motivation to want to deal with or better manage their space constraints. I think if the reimbursement amount was in the $300 range per treatment, many of these docs would be chomping at the bit to incorporate this treatment in their practice. That is probably an unrealistic amount to expect to get.

My 25 cents worth of observations.

 

Now that 2014 is over, let us measure Uroplasty’s 2014 performance under RK’s leadership.

There are many fans of RK on this board who have made laudatory comments that at times could lead one to believe that RK walks on water, while his critics do not seem to think much of his performance and some seem to suggest that those fans’ judgment is impaired by the Kool Aid RK has been pumping into them. I would say both his fans and critics no doubt hold strong OPINIONS.

Let us get past the opinions and measure the performance OBJECTIVELY, based on what RK delivered to the shareholders in 2014, as measured by the return the shareholders earned on their investment in Uroplasty. I think all or most of us will agree that the objectively measured collective judgment of the shareholders is a powerful measurement tool not subject to much quibbling.

(1) Uroplasty’s stock closed at $2.06 per share on 12/31/14, down from $2.73 per share on 12/31/13, for a -25% return for the shareholders, this in a bull market when by one measure the broad market return was about +14%. This is a swing of 39 percent in the return. Think about that. You would have been 39% richer had you invested in the broad market compared to your decision to invest in Uroplasty.

(2) Shortly after the announcement of the December quarter results in late January 2014 the company’s stock price tanked and has been on a generally downward trajectory in 2014. Someone had earlier posted a chart of that trajectory that I have posted the link to below. What does this tell you?

http://finance.yahoo.com/echarts?s=UPI+Interactive#%7B%22range%22%3A%7B%22start%22%3A%222014-01-24T18%3A00%3A00.000Z%22%2C%22end%22%3A%222014-12-31T18%3A00%3A00.000Z%22%7D%2C%22scale%22%3A%22linear%22%7D

(3) The stock price had reached a 52-week high of $5.10, according to yahoo data, so from that point the decline is even more precipitous.

(4) About a week ago the company announced a merger with Vision Sciences. On 12/19/24, the day before the merger announcement, the stock price closed at $2.35 per share. On 12/31/14, the stock price closed at $2.06, for a decline of about 12%. What kind of a vote of confidence have the shareholders given to the merger announcement?

(5) Shortly after the merger announcement, the company’s stock price reached a new 52-week low of $1.76. What kind of a vote of confidence is that in the merger?

The stock price is generally a reflection of future expectations. It would appear to me that the shareholders are not putting much confidence in the future expectations and the company’s strategy or the ability of the company to deliver on it.

So the question is: What needs to change? Any suggestions out there?

 

My suggestion? Find another CEO that can perform their number one priority well...increase share value for shareholders. He has proven this responsibility is not a skill set of his that he is good at

 

you must be dreaming. i doubt if that will happen. the board seems to think highly of RK based on the compensation package they have offered him

 

(2) Shortly after the announcement of the December quarter results in late January 2014 the company’s stock price tanked and has been on a generally downward trajectory in 2014. Someone had earlier posted a chart of that trajectory that I have posted the link to below. What does this tell you?

So the question is: What needs to change? Any suggestions out there?[/QUOTE]

I think this downward trend in share price is because of two things that have happened that suggest a vote of no confidence with managements ability to create share price value for the investors. The december quarter results of urgentPc were very disappointing which started the downward trend in share value in january and, in the subsequent quarters the results were doubly disappointing with urgentPc , in light of the whopping increase in covered lives and a much larger, better trained and more focused sales organization. Add to that the vote of no confidence of the merger with value science. About two fifth of the 25% decline in share value in 2014 occurred after the announcement of the merger.

So the question is still valid if this management is capable of delivering share value for the investors.

 

I think this downward trend in share price is because of two things that have happened that suggest a vote of no confidence with managements ability to create share price value for the investors. The december quarter results of urgentPc were very disappointing which started the downward trend in share value in january and, in the subsequent quarters the results were doubly disappointing with urgentPc , in light of the whopping increase in covered lives and a much larger, better trained and more focused sales organization. Add to that the vote of no confidence of the merger with value science. About two fifth of the 25% decline in share value in 2014 occurred after the announcement of the merger.

So the question is still valid if this management is capable of delivering share value for the investors.[/QUOTE]

The only thing management is going to do, is stay in bed with the Board to make sure their comp continues to rise. It's s shame to see such highly compensated individuals who are continuously bonused despite a 52 week low on share price.