Should You Worry About Alpha Pro Tech, Ltd.'s (NYSEMKT:APT) CEO Pay Cheque?

In 2016, Lloyd Hoffman was appointed CEO of Alpha Pro Tech, Ltd. (NYSEMKT:APT). First, this article will compare CEO compensation with compensation at similar sized companies. 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 Alpha Pro Tech

How Does Lloyd Hoffman's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Alpha Pro Tech, Ltd. has a market cap of US$203m, and reported total annual CEO compensation of US$934k for the year to December 2019. That's actually a decrease on the year before. We think total compensation is more important but we note that the CEO salary is lower, at US$632k. We looked at a group of companies with market capitalizations from US$100m to US$400m, and the median CEO total compensation was US$1.4m.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Alpha Pro Tech stands. Speaking on an industry level, we can see that nearly 19% of total compensation represents salary, while the remainder of 81% is other remuneration. According to our research, Alpha Pro Tech has allocated a higher percentage of pay to salary in comparison to the broader sector.

Most shareholders would consider it a positive that Lloyd Hoffman takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance. The graphic below shows how CEO compensation at Alpha Pro Tech has changed from year to year.

Is Alpha Pro Tech, Ltd. Growing?

On average over the last three years, Alpha Pro Tech, Ltd. has seen earnings per share (EPS) move in a favourable direction by 27% each year (using a line of best fit). In the last year, its revenue is up 11%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Alpha Pro Tech, Ltd. Been A Good Investment?

Boasting a total shareholder return of 393% over three years, Alpha Pro Tech, Ltd. 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...

Alpha Pro Tech, Ltd. is currently paying its CEO below what is normal for companies of its size.

Since the business is growing, many would argue this suggests the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Lloyd Hoffman deserves a raise! It is relatively rare to see a modestly paid CEO when performance is so impressive. But it is even better if company insiders are also buying shares with their own money. Shifting gears from CEO pay for a second, we've picked out 2 warning signs for Alpha Pro Tech that investors should be aware of in a dynamic business environment.

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.

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.