How Should Investors React To Capstone Turbine's (NASDAQ:CPST) CEO Pay?

This article will reflect on the compensation paid to Darren Jamison who has served as CEO of Capstone Turbine Corporation (NASDAQ:CPST) since 2006. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Capstone Turbine.

View our latest analysis for Capstone Turbine

How Does Total Compensation For Darren Jamison Compare With Other Companies In The Industry?

Our data indicates that Capstone Turbine Corporation has a market capitalization of US$130m, and total annual CEO compensation was reported as US$847k for the year to March 2020. Notably, that's a decrease of 25% over the year before. We note that the salary portion, which stands at US$541.0k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$557k. This suggests that Darren Jamison is paid more than the median for the industry. Moreover, Darren Jamison also holds US$1.6m worth of Capstone Turbine stock directly under their own name.

On an industry level, roughly 29% of total compensation represents salary and 71% is other remuneration. According to our research, Capstone Turbine 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.

Capstone Turbine Corporation's Growth

Over the past three years, Capstone Turbine Corporation has seen its earnings per share (EPS) grow by 19% per year. Its revenue is down 27% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Capstone Turbine Corporation Been A Good Investment?

Capstone Turbine Corporation has generated a total shareholder return of 30% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As we noted earlier, Capstone Turbine pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed us with its EPS growth, over three years. Looking at the same time period, we think that the shareholder returns are respectable. So, considering the EPS growth we do not wish to criticize CEO compensation, though we'd recommend further research on management.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Capstone Turbine that you should be aware of before investing.

Switching gears from Capstone Turbine, 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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