What Can We Make Of Hurco Companies' (NASDAQ:HURC) CEO Compensation?

This article will reflect on the compensation paid to Michael Doar who has served as CEO of Hurco Companies, Inc. (NASDAQ:HURC) since 2001. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Hurco Companies.

See our latest analysis for Hurco Companies

How Does Total Compensation For Michael Doar Compare With Other Companies In The Industry?

According to our data, Hurco Companies, Inc. has a market capitalization of US$207m, and paid its CEO total annual compensation worth US$2.7m over the year to October 2019. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$492k.

In comparison with other companies in the industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$1.5m. This suggests that Michael Doar is paid more than the median for the industry. Moreover, Michael Doar also holds US$4.2m worth of Hurco Companies stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. Hurco Companies is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Hurco Companies, Inc.'s Growth Numbers

Over the last three years, Hurco Companies, Inc. has shrunk its earnings per share by 23% per year. Its revenue is down 35% over the previous year.

The decline in EPS is a bit concerning. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hurco Companies, Inc. Been A Good Investment?

Given the total shareholder loss of 28% over three years, many shareholders in Hurco Companies, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Michael is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is concerning) in Hurco Companies we think you should know about.

Important note: Hurco Companies is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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