Ron Klingle became the CEO of Avalon Holdings Corporation (NYSEMKT:AWX) in 2011, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for Avalon Holdings
How Does Total Compensation For Ron Klingle Compare With Other Companies In The Industry?
According to our data, Avalon Holdings Corporation has a market capitalization of US$8.7m, and paid its CEO total annual compensation worth US$243k over the year to December 2019. That's mostly flat as compared to the prior year's compensation. In particular, the salary of US$210.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$517k. Accordingly, Avalon Holdings pays its CEO under the industry median. What's more, Ron Klingle holds US$1.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$210k | US$210k | 87% |
| Other | US$33k | US$32k | 13% |
| Total Compensation | US$243k | US$242k | 100% |
Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. According to our research, Avalon Holdings has allocated a higher percentage of pay to salary in comparison to the wider industry. 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.
A Look at Avalon Holdings Corporation's Growth Numbers
Over the last three years, Avalon Holdings Corporation has shrunk its earnings per share by 44% per year. Its revenue is down 8.3% over the previous year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Avalon Holdings Corporation Been A Good Investment?
With a total shareholder return of 8.7% over three years, Avalon Holdings Corporation has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
To Conclude...
As we noted earlier, Avalon Holdings pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Shareholder returns have been uninspiring, but EPS growth has arguably been worse, over the last three years. So, although we can't say CEO compensation is very high, shareholders might want to see an improvement in overall performance before agreeing that Ron deserves a bump.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 2 which are a bit unpleasant) in Avalon Holdings we think you should know about.
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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About NYSEAM:AWX
Avalon Holdings
Provides waste management services to industrial, commercial, municipal, and governmental customers in the United States.
Acceptable track record and slightly overvalued.
