Is Hooker Furniture Corporation (NASDAQ:HOFT) Overpaying Its CEO?

In 2000 Paul Toms was appointed CEO of Hooker Furniture Corporation (NASDAQ:HOFT). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. 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 Hooker Furniture

How Does Paul Toms’s Compensation Compare With Similar Sized Companies?

According to our data, Hooker Furniture Corporation has a market capitalization of US$238m, and pays its CEO total annual compensation worth US$1.5m. (This figure is for the year to February 2019). While we always look at total compensation first, we note that the salary component is less, at US$415k. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$1.2m.

As you can see, Paul Toms is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Hooker Furniture Corporation is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Hooker Furniture, below.

NasdaqGS:HOFT CEO Compensation, August 3rd 2019
NasdaqGS:HOFT CEO Compensation, August 3rd 2019

Is Hooker Furniture Corporation Growing?

Over the last three years Hooker Furniture Corporation has grown its earnings per share (EPS) by an average of 23% per year (using a line of best fit). Its revenue is up 6.7% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see modest revenue growth, suggesting the underlying business is healthy.

Has Hooker Furniture Corporation Been A Good Investment?

Since shareholders would have lost about 7.5% over three years, some Hooker Furniture Corporation shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We examined the amount Hooker Furniture Corporation pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we’d need more time to form a view on CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Hooker Furniture shares (free trial).

Important note: Hooker Furniture may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.