We Think The Compensation For Virco Mfg. Corporation's (NASDAQ:VIRC) CEO Looks About Right

By
Simply Wall St
Published
June 15, 2021
NasdaqGM:VIRC
Source: Shutterstock

Performance at Virco Mfg. Corporation (NASDAQ:VIRC) has been rather uninspiring recently and shareholders may be wondering how CEO Robert Virtue plans to fix this. At the next AGM coming up on 22 June 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We think CEO compensation looks appropriate given the data we have put together.

See our latest analysis for Virco Mfg

How Does Total Compensation For Robert Virtue Compare With Other Companies In The Industry?

Our data indicates that Virco Mfg. Corporation has a market capitalization of US$58m, and total annual CEO compensation was reported as US$302k for the year to January 2021. That's a notable decrease of 35% on last year. We note that the salary portion, which stands at US$286.6k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$534k. In other words, Virco Mfg pays its CEO lower than the industry median. Furthermore, Robert Virtue directly owns US$16m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20212020Proportion (2021)
Salary US$287k US$319k 95%
Other US$15k US$145k 5%
Total CompensationUS$302k US$463k100%

On an industry level, roughly 24% of total compensation represents salary and 76% is other remuneration. Investors will find it interesting that Virco Mfg pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
NasdaqGM:VIRC CEO Compensation June 16th 2021

Virco Mfg. Corporation's Growth

Virco Mfg. Corporation's earnings per share (EPS) grew 53% per year over the last three years. Its revenue is down 11% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Virco Mfg. Corporation Been A Good Investment?

Since shareholders would have lost about 18% over three years, some Virco Mfg. Corporation investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Virco Mfg pays its CEO a majority of compensation through a salary. The fact that shareholders are sitting on a loss is certainly disheartening. This contrasts to the strong EPS growth recently however, and suggests that there may be other factors at play driving down the share price. There needs to be more focus by management and the board to examine why the share price has diverged from fundamentals. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Virco Mfg (1 can't be ignored!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.