In 2011 John Hewitt was appointed CEO of Matrix Service Company (NASDAQ:MTRX). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. This method should give us information to assess how appropriately the company pays the CEO.
How Does John Hewitt’s Compensation Compare With Similar Sized Companies?
According to our data, Matrix Service Company has a market capitalization of US$518m, and pays its CEO total annual compensation worth US$2.4m. (This number is for the twelve months until June 2018). While we always look at total compensation first, we note that the salary component is less, at US$750k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$1.8m.
It would therefore appear that Matrix Service Company pays John Hewitt more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Matrix Service has changed from year to year.
Is Matrix Service Company Growing?
Matrix Service Company has reduced its earnings per share by an average of 112% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 20%.
Sadly for shareholders, earnings per share are actually down, over three years. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.
Has Matrix Service Company Been A Good Investment?
Matrix Service Company has served shareholders reasonably well, with a total return of 11% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
We compared the total CEO remuneration paid by Matrix Service Company, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.We think many shareholders would be underwhelmed with the business growth over the last three years.
And shareholder returns are decent but not great. So we think more research is needed, but we don’t think the CEO underpaid. Whatever your view on compensation, you might want to check if insiders are buying or selling Matrix Service shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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