Is Acme United Corporation’s (NYSEMKT:ACU) CEO Overpaid Relative To Its Peers?

Walter Johnsen became the CEO of Acme United Corporation (NYSEMKT:ACU) in 1995. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Acme United

How Does Walter Johnsen’s Compensation Compare With Similar Sized Companies?

Our data indicates that Acme United Corporation is worth US$74m, and total annual CEO compensation was reported as US$1.1m for the year to December 2019. 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$749k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$614k.

Now let’s take a look at the pay mix on an industry and company level to gain a better understanding of where Acme United stands. On a sector level, around 23% of total compensation represents salary and 77% is other remuneration. It’s interesting to note that Acme United pays out a greater portion of remuneration through salary, in comparison to the wider industry.

It would therefore appear that Acme United Corporation pays Walter Johnsen more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. You can see, below, how CEO compensation at Acme United has changed over time.

AMEX:ACU CEO Compensation May 7th 2020
AMEX:ACU CEO Compensation May 7th 2020

Is Acme United Corporation Growing?

Acme United Corporation has seen earnings per share (EPS) move positively by an average of 1.6% a year, over the last three years (using a line of best fit). Its revenue is up 7.2% over last year.

I’m not particularly impressed by the revenue growth, but it is good to see modest EPS growth. It’s clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Although we don’t have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Acme United Corporation Been A Good Investment?

Given the total loss of 12% over three years, many shareholders in Acme United Corporation are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We examined the amount Acme United Corporation pays its CEO, and compared it to the amount paid by 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 an important area to keep your eyes on, but we’ve also identified 3 warning signs for Acme United (1 shouldn’t be ignored!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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