Neil Wilkin has been the CEO of Optical Cable Corporation (NASDAQ:OCC) since 2003. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Neil Wilkin’s Compensation Compare With Similar Sized Companies?
Our data indicates that Optical Cable Corporation is worth US$24m, and total annual CEO compensation was reported as US$1.1m for the year to October 2018. While we always look at total compensation first, we note that the salary component is less, at US$442k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$524k.
Thus we can conclude that Neil Wilkin receives more in total compensation than the median of a group of companies in the same market, and of similar size to Optical Cable Corporation. 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.
The graphic below shows how CEO compensation at Optical Cable has changed from year to year.
Is Optical Cable Corporation Growing?
On average over the last three years, Optical Cable Corporation has grown earnings per share (EPS) by 1.9% each year (using a line of best fit). In the last year, its revenue is down 13%.
I would prefer it if there was revenue growth, but it is good to see EPS growth. These two metric are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching. We don’t have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Optical Cable Corporation Been A Good Investment?
Given the total loss of 0.6% over three years, many shareholders in Optical Cable Corporation are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at Optical Cable Corporation with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Although we’d stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. Whatever your view on compensation, you might want to check if insiders are buying or selling Optical Cable shares (free trial).
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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