Is P&F Industries, Inc.’s (NASDAQ:PFIN) CEO Pay Justified?

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Richard Horowitz became the CEO of P&F Industries, Inc. (NASDAQ:PFIN) in 1995. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for P&F Industries

How Does Richard Horowitz’s Compensation Compare With Similar Sized Companies?

According to our data, P&F Industries, Inc. has a market capitalization of US$26m, and pays its CEO total annual compensation worth US$1.7m. (This number is for the twelve months until December 2018). That’s a modest increase of 2.7% on the prior year year. We think total compensation is more important but we note that the CEO salary is lower, at US$700k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$453k.

It would therefore appear that P&F Industries, Inc. pays Richard Horowitz more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at P&F Industries has changed from year to year.

NasdaqGM:PFIN CEO Compensation, June 26th 2019
NasdaqGM:PFIN CEO Compensation, June 26th 2019

Is P&F Industries, Inc. Growing?

P&F Industries, Inc. has increased its earnings per share (EPS) by an average of 72% a year, over the last three years (using a line of best fit). Its revenue is up 3.4% over last year.

This demonstrates that the company has been improving recently. A good result. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. Although we don’t have analyst forecasts, you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has P&F Industries, Inc. Been A Good Investment?

Since shareholders would have lost about 4.1% over three years, some P&F Industries, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We compared the total CEO remuneration paid by P&F Industries, Inc., 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.

Importantly, though, the company has impressed with its earnings per share growth, over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. So you may want to check if insiders are buying P&F Industries shares with their own money (free access).

Important note: P&F Industries 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.