Is Daktronics, Inc.’s (NASDAQ:DAKT) CEO Salary Justified?

Reece Kurtenbach has been the CEO of Daktronics, Inc. (NASDAQ:DAKT) since 2013. 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. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Daktronics

How Does Reece Kurtenbach’s Compensation Compare With Similar Sized Companies?

Our data indicates that Daktronics, Inc. is worth US$281m, and total annual CEO compensation is US$516k. (This figure is for the year to April 2019). That’s actually a decrease on the year before. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$444k. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO total compensation of that group was US$1.2m.

Most shareholders would consider it a positive that Reece Kurtenbach takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it’s important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at Daktronics has changed from year to year.

NasdaqGS:DAKT CEO Compensation, August 23rd 2019
NasdaqGS:DAKT CEO Compensation, August 23rd 2019

Is Daktronics, Inc. Growing?

Daktronics, Inc. has reduced its earnings per share by an average of 21% a year, over the last three years (measured with a line of best fit). Its revenue is down -6.7% over last year.

Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.

Has Daktronics, Inc. Been A Good Investment?

Given the total loss of 27% over three years, many shareholders in Daktronics, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

It looks like Daktronics, Inc. pays its CEO less than similar sized companies.

The compensation paid to Reece Kurtenbach is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). Considering all these factors, we’d stop short of saying the CEO pay is too high, but we don’t think shareholders would want to see a pay rise before business performance improves. Whatever your view on compensation, you might want to check if insiders are buying or selling Daktronics shares (free trial).

Important note: Daktronics may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.