Douglas Starrett has been the CEO of The LS Starrett Company (NYSE:SCX) since 2001. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Douglas Starrett’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that The LS Starrett Company has a market cap of US$41m, and is paying total annual CEO compensation of US$641k. That’s actually a decrease on the year before. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO compensation in that group is US$291k.
Thus we can conclude that Douglas Starrett receives more in total compensation than the median of a group of companies in the same market, and of similar size to The LS Starrett Company. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at L.S. Starrett, below.
Is The LS Starrett Company Growing?
The LS Starrett Company has reduced its earnings per share by an average of 36% a year, over the last three years. It achieved revenue growth of 4.5% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.
Although we don’t have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has The LS Starrett Company Been A Good Investment?
Since shareholders would have lost about 47% over three years, some The LS Starrett Company shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at The LS Starrett Company with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.We think many shareholders would be underwhelmed with the business growth over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. This analysis suggests to us that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling The LS Starrett Company shares (free trial).
Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.