Should You Worry About Art’s-Way Manufacturing Co., Inc.’s (NASDAQ:ARTW) CEO Pay Cheque?

Carrie Gunnerson became the CEO of Art’s-Way Manufacturing Co., Inc. (NASDAQ:ARTW) in 2007. First, this article will compare CEO compensation with compensation at similar sized companies. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Art’s-Way Manufacturing

How Does Carrie Gunnerson’s Compensation Compare With Similar Sized Companies?

According to our data, Art’s-Way Manufacturing Co., Inc. has a market capitalization of US$8.3m, and paid its CEO total annual compensation worth US$199k over the year to November 2018. While we always look at total compensation first, we note that the salary component is less, at US$172k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$515k.

Most shareholders would consider it a positive that Carrie Gunnerson 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.

You can see a visual representation of the CEO compensation at Art’s-Way Manufacturing, below.

NasdaqCM:ARTW CEO Compensation, January 20th 2020
NasdaqCM:ARTW CEO Compensation, January 20th 2020

Is Art’s-Way Manufacturing Co., Inc. Growing?

Art’s-Way Manufacturing Co., Inc. has reduced its earnings per share by an average of 58% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down 8.7%.

Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don’t have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Art’s-Way Manufacturing Co., Inc. Been A Good Investment?

Since shareholders would have lost about 40% over three years, some Art’s-Way Manufacturing Co., Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

It looks like Art’s-Way Manufacturing Co., Inc. pays its CEO less than similar sized companies.

Carrie Gunnerson is paid less than CEOs of similar size companies, but the company isn’t growing and total shareholder returns have been disappointing. We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. So you may want to check if insiders are buying Art’s-Way Manufacturing shares with their own money (free access).

If you want to buy a stock that is better than Art’s-Way Manufacturing, 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 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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