How Should Investors React To Alpha Pro Tech's (NYSEMKT:APT) CEO Pay?

Simply Wall St
November 25, 2020

Lloyd Hoffman became the CEO of Alpha Pro Tech, Ltd. (NYSEMKT:APT) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Alpha Pro Tech.

View our latest analysis for Alpha Pro Tech

How Does Total Compensation For Lloyd Hoffman Compare With Other Companies In The Industry?

Our data indicates that Alpha Pro Tech, Ltd. has a market capitalization of US$160m, and total annual CEO compensation was reported as US$934k for the year to December 2019. That's a slightly lower by 6.3% over the previous year. We note that the salary portion, which stands at US$632.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$474k. Hence, we can conclude that Lloyd Hoffman is remunerated higher than the industry median.

Component20192018Proportion (2019)
Salary US$632k US$618k 68%
Other US$302k US$379k 32%
Total CompensationUS$934k US$997k100%

Talking in terms of the industry, salary represented approximately 19% of total compensation out of all the companies we analyzed, while other remuneration made up 81% of the pie. Alpha Pro Tech is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

AMEX:APT CEO Compensation November 25th 2020

Alpha Pro Tech, Ltd.'s Growth

Alpha Pro Tech, Ltd.'s earnings per share (EPS) grew 90% per year over the last three years. In the last year, its revenue is up 81%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Alpha Pro Tech, Ltd. Been A Good Investment?

We think that the total shareholder return of 186%, over three years, would leave most Alpha Pro Tech, Ltd. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

As we noted earlier, Alpha Pro Tech pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But EPS growth and shareholder returns have been top-notch for the past three years. As a result of the excellent all-round performance of the company, we believe CEO compensation is fair. The pleasing shareholder returns are the cherry on top. We wouldn't be wrong in saying that shareholders feel that Lloyd's performance creates value for the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Alpha Pro Tech that investors should think about before committing capital to this stock.

Important note: Alpha Pro Tech 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.

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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. 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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