Is The Eastern Company’s (NASDAQ:EML) CEO Being Overpaid?

In 2016 Gus Vlak was appointed CEO of The Eastern Company (NASDAQ:EML). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Eastern

How Does Gus Vlak’s Compensation Compare With Similar Sized Companies?

Our data indicates that The Eastern Company is worth US$176m, and total annual CEO compensation was reported as US$1.2m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$450k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$100m to US$400m. The median total CEO compensation was US$1.1m.

So Gus Vlak receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.

You can see a visual representation of the CEO compensation at Eastern, below.

NasdaqGM:EML CEO Compensation, February 16th 2020
NasdaqGM:EML CEO Compensation, February 16th 2020

Is The Eastern Company Growing?

The Eastern Company has increased its earnings per share (EPS) by an average of 24% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 3.4%.

This demonstrates that the company has been improving recently. A good result. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 The Eastern Company Been A Good Investment?

Boasting a total shareholder return of 52% over three years, The Eastern Company has done well by shareholders. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

Remuneration for Gus Vlak is close enough to the median pay for a CEO of a similar sized company .

The company is growing earnings per share and total shareholder returns have been pleasing. Indeed, many might consider the pay rather modest, given the solid company performance! So you may want to check if insiders are buying Eastern shares with their own money (free access).

Important note: Eastern 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.

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.

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. Thank you for reading.