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

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

In 1995 Richard Horowitz was appointed CEO of P&F Industries, Inc. (NASDAQ:PFIN). 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. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for P&F Industries

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

At the time of writing our data says that P&F Industries, Inc. has a market cap of US$26m, and is paying total annual CEO compensation of US$1.7m. (This number is for the twelve months until December 2018). That’s a fairly small increase of 2.7% on year before. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$700k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be 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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at P&F Industries has changed over time.

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). In the last year, its revenue is up 3.4%.

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. We don’t have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

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

Given the total loss of 4.1% over three years, many shareholders in P&F Industries, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We examined the amount P&F Industries, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. So you may want to check if insiders are buying P&F Industries shares with their own money (free access).

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.

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.