Douglas Starrett became the CEO of The L.S. Starrett Company (NYSE:SCX) in 2001. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Douglas Starrett’s Compensation Compare With Similar Sized Companies?
Our data indicates that The L.S. Starrett Company is worth US$40m, and total annual CEO compensation was reported as US$1.5m for the year to June 2019. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$425k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$524k.
As you can see, Douglas Starrett is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean The L.S. Starrett Company is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at L.S. Starrett, below.
Is The L.S. Starrett Company Growing?
The L.S. Starrett Company has increased its earnings per share (EPS) by an average of 102% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 5.5%.
This shows that the company has improved itself over the last few years. Good news for shareholders. 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 might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has The L.S. Starrett Company Been A Good Investment?
Given the total loss of 42% over three years, many shareholders in The L.S. Starrett Company are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We examined the amount The L.S. Starrett Company pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling L.S. Starrett (free visualization of insider trades).
If you want to buy a stock that is better than L.S. Starrett, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at email@example.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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