Stock Analysis

Here's Why Powell Industries, Inc.'s (NASDAQ:POWL) CEO Might See A Pay Rise Soon

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Shareholders will probably not be disappointed by the robust results at Powell Industries, Inc. (NASDAQ:POWL) recently and they will be keeping this in mind as they go into the AGM on 15 February 2023. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

View our latest analysis for Powell Industries

Comparing Powell Industries, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Powell Industries, Inc. has a market capitalization of US$532m, and reported total annual CEO compensation of US$2.3m for the year to September 2022. That's slightly lower by 4.4% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$520k.

For comparison, other companies in the American Electrical industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$3.9m. This suggests that Brett Cope is paid below the industry median. Furthermore, Brett Cope directly owns US$4.4m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20222021Proportion (2022)
Salary US$520k US$512k 23%
Other US$1.8m US$1.9m 77%
Total CompensationUS$2.3m US$2.4m100%

Speaking on an industry level, nearly 14% of total compensation represents salary, while the remainder of 86% is other remuneration. According to our research, Powell Industries has allocated a higher percentage of pay to salary in comparison to the wider industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NasdaqGS:POWL CEO Compensation February 9th 2023

A Look at Powell Industries, Inc.'s Growth Numbers

Over the past three years, Powell Industries, Inc. has seen its earnings per share (EPS) grow by 4.2% per year. It achieved revenue growth of 17% over the last year.

We would argue that the modest growth in revenue is a notable positive. And the improvement in EPSis modest but respectable. Although we'll stop short of calling the stock a top performer, we think the company has potential. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Powell Industries, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Powell Industries, Inc. for providing a total return of 36% 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.

In Summary...

Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for Powell Industries (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Important note: Powell Industries 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.

Valuation is complex, but we're helping make it simple.

Find out whether Powell Industries is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.