Howard Woltz became the CEO of Insteel Industries, Inc. (NASDAQ:IIIN) in 1991. First, this article will compare CEO compensation with compensation at similar sized companies. 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 Howard Woltz’s Compensation Compare With Similar Sized Companies?
Our data indicates that Insteel Industries, Inc. is worth US$384m, and total annual CEO compensation is US$2.3m. (This number is for the twelve months until September 2018). That’s a fairly small increase of 6.3% on year before. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$607k. 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$1.5m.
It would therefore appear that Insteel Industries, Inc. pays Howard Woltz 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.
You can see a visual representation of the CEO compensation at Insteel Industries, below.
Is Insteel Industries, Inc. Growing?
Insteel Industries, Inc. has reduced its earnings per share by an average of 1.7% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 17%.
The lack of earnings per share growth in the last three years is unimpressive. And while it’s good to see some good revenue growth recently, the growth isn’t really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Insteel Industries, Inc. Been A Good Investment?
Since shareholders would have lost about 24% over three years, some Insteel Industries, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount Insteel Industries, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
Just as bad, share price gains for investors have failed to materialize, over the same period. Some might well form the view that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling Insteel Industries shares (free trial).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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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. Thank you for reading.