Should You Worry About Acme United Corporation’s (NYSEMKT:ACU) CEO Pay Cheque?

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Walter Johnsen has been the CEO of Acme United Corporation (NYSEMKT:ACU) since 1995. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Acme United

How Does Walter Johnsen’s Compensation Compare With Similar Sized Companies?

According to our data, Acme United Corporation has a market capitalization of US$71m, and pays its CEO total annual compensation worth US$1.1m. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$712k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$471k.

As you can see, Walter Johnsen is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Acme United Corporation is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Acme United has changed from year to year.

AMEX:ACU CEO Compensation, July 15th 2019
AMEX:ACU CEO Compensation, July 15th 2019

Is Acme United Corporation Growing?

On average over the last three years, Acme United Corporation has shrunk earnings per share by 13% each year (measured with a line of best fit). In the last year, its revenue is up 1.8%.

Unfortunately, earnings per share have trended lower over the last three years. The fairly low revenue growth fails to impress given that the earnings per share is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.

Has Acme United Corporation Been A Good Investment?

Acme United Corporation has served shareholders reasonably well, with a total return of 21% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

We compared the total CEO remuneration paid by Acme United Corporation, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

While shareholder returns are acceptable, they don’t delight. So we doubt many shareholders would consider the CEO pay to be particularly modest! Whatever your view on compensation, you might want to check if insiders are buying or selling Acme United shares (free trial).

If you want to buy a stock that is better than Acme United, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.