Most Shareholders Will Probably Agree With Ennis, Inc.'s (NYSE:EBF) CEO Compensation

Despite Ennis, Inc.'s (NYSE:EBF) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 15 July 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Ennis

How Does Total Compensation For Keith Walters Compare With Other Companies In The Industry?

At the time of writing, our data shows that Ennis, Inc. has a market capitalization of US$531m, and reported total annual CEO compensation of US$2.3m for the year to February 2021. That's a notable decrease of 25% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$972k.

On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$2.1m. So it looks like Ennis compensates Keith Walters in line with the median for the industry. Moreover, Keith Walters also holds US$8.6m worth of Ennis stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	US$972k	US$972k	41%
Other	US$1.4m	US$2.2m	59%
Total Compensation	US$2.3m	US$3.1m	100%

On an industry level, around 24% of total compensation represents salary and 76% is other remuneration. Ennis pays out 41% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Ennis, Inc.'s Growth

Over the last three years, Ennis, Inc. has shrunk its earnings per share by 8.1% per year. In the last year, its revenue is down 13%.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Ennis, Inc. Been A Good Investment?

Ennis, Inc. has generated a total shareholder return of 17% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

Shareholders may want to check for free if Ennis insiders are buying or selling shares.

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.

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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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