It would be hard to discount the role that CEO Lee Rudow has played in delivering the impressive results at Transcat, Inc. (NASDAQ:TRNS) recently. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 08 September 2021. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. Here is our take on why we think CEO compensation is not extravagant.
How Does Total Compensation For Lee Rudow Compare With Other Companies In The Industry?
At the time of writing, our data shows that Transcat, Inc. has a market capitalization of US$506m, and reported total annual CEO compensation of US$1.1m for the year to March 2021. That's a fairly small increase of 6.3% over the previous year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$400k.
For comparison, other companies in the same industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$1.1m. From this we gather that Lee Rudow is paid around the median for CEOs in the industry. What's more, Lee Rudow holds US$11m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 24% of total compensation represents salary and 76% is other remuneration. Transcat is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Transcat, Inc.'s Growth
Transcat, Inc.'s earnings per share (EPS) grew 16% per year over the last three years. In the last year, its revenue is up 7.4%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Transcat, Inc. Been A Good Investment?
We think that the total shareholder return of 183%, over three years, would leave most Transcat, Inc. shareholders smiling. 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.
Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. 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.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Transcat that investors should look into moving forward.
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.
When trading Transcat or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.