How Much Did Spectra Systems' (LON:SPSC) CEO Pocket Last Year?

Nabil Lawandy became the CEO of Spectra Systems Corporation (LON:SPSC) in 1996, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Spectra Systems pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Spectra Systems

Comparing Spectra Systems Corporation's CEO Compensation With the industry

According to our data, Spectra Systems Corporation has a market capitalization of UK£82m, and paid its CEO total annual compensation worth US$504k over the year to December 2019. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at US$475.0k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below UK£149m, reported a median total CEO compensation of US$306k. Accordingly, our analysis reveals that Spectra Systems Corporation pays Nabil Lawandy north of the industry median. What's more, Nabil Lawandy holds UK£4.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. According to our research, Spectra Systems has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Spectra Systems Corporation's Growth Numbers

Spectra Systems Corporation's earnings per share (EPS) grew 1.5% per year over the last three years. Its revenue is up 22% over the last year.

We think the revenue growth is good. And the modest growth in EPS isn't bad, either. Although we'll stop short of calling the stock a top performer, we think the company has potential. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Spectra Systems Corporation Been A Good Investment?

Most shareholders would probably be pleased with Spectra Systems Corporation for providing a total return of 118% over three years. 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.

To Conclude...

As we touched on above, Spectra Systems Corporation is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Importantly though, shareholder returns for the last three years have been excellent. That's why we were hoping EPS growth would match this growth, but sadly that is not the case. All things considered, we don't think there's a reason to criticize CEO compensation, though we hope Spectra Systems will post healthier EPS growth moving forward.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Spectra Systems that investors should look into moving forward.

Switching gears from Spectra Systems, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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