We Think Matrix Service Company's (NASDAQ:MTRX) CEO Compensation Package Needs To Be Put Under A Microscope

Shareholders will probably not be too impressed with the underwhelming results at Matrix Service Company (NASDAQ:MTRX) recently. At the upcoming AGM on 02 November 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Matrix Service

How Does Total Compensation For John Hewitt Compare With Other Companies In The Industry?

At the time of writing, our data shows that Matrix Service Company has a market capitalization of US$279m, and reported total annual CEO compensation of US$2.6m for the year to June 2021. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at US$726k.

On comparing similar companies from the same industry with market caps ranging from US$100m to US$400m, we found that the median CEO total compensation was US$1.4m. Accordingly, our analysis reveals that Matrix Service Company pays John Hewitt north of the industry median. What's more, John Hewitt holds US$3.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	US$726k	US$800k	28%
Other	US$1.9m	US$1.7m	72%
Total Compensation	US$2.6m	US$2.5m	100%

On an industry level, roughly 24% of total compensation represents salary and 76% is other remuneration. It's interesting to note that Matrix Service pays out a greater portion of remuneration through salary, compared to the industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Matrix Service Company's Growth Numbers

Over the last three years, Matrix Service Company has shrunk its earnings per share by 55% per year. It saw its revenue drop 39% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Matrix Service Company Been A Good Investment?

The return of -50% over three years would not have pleased Matrix Service Company shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

So you may want to check if insiders are buying Matrix Service shares with their own money (free access).

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.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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