In 1989 Paul Sarvadi was appointed CEO of Insperity, Inc. (NYSE:NSP). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. 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.
How Does Paul Sarvadi’s Compensation Compare With Similar Sized Companies?
According to our data, Insperity, Inc. has a market capitalization of US$1.2b, and paid its CEO total annual compensation worth US$7.2m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.0m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO total compensation was US$4.7m.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 21% of total compensation out of all the companies we analysed, while other remuneration made up 79% of the pie. It’s interesting to note that Insperity allocates a smaller portion of compensation to salary in comparison to the broader industry.
Thus we can conclude that Paul Sarvadi receives more in total compensation than the median of a group of companies in the same market, and of similar size to Insperity, Inc.. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. You can see, below, how CEO compensation at Insperity has changed over time.
Is Insperity, Inc. Growing?
Insperity, Inc. has increased its earnings per share (EPS) by an average of 34% a year, over the last three years (using a line of best fit). Its revenue is up 13% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.
Has Insperity, Inc. Been A Good Investment?
Given the total loss of 28% over three years, many shareholders in Insperity, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We compared total CEO remuneration at Insperity, Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. 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. Moving away from CEO compensation for the moment, we’ve identified 2 warning signs for Insperity that you should be aware of before investing.
Important note: Insperity 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 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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