This article will reflect on the compensation paid to Chris Killoy who has served as CEO of Sturm, Ruger & Company, Inc. (NYSE:RGR) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Sturm, Ruger & Company, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Sturm, Ruger & Company, Inc. has a market capitalization of US$1.1b, and reported total annual CEO compensation of US$1.9m for the year to December 2019. Notably, that's a decrease of 9.2% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$500k.
For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$2.1m. This suggests that Sturm Ruger remunerates its CEO largely in line with the industry average. What's more, Chris Killoy holds US$450k worth of shares in the company in their own name.
On an industry level, roughly 26% of total compensation represents salary and 74% is other remuneration. Sturm Ruger is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Sturm, Ruger & Company, Inc.'s Growth
Sturm, Ruger & Company, Inc. has seen its earnings per share (EPS) increase by 3.4% a year over the past three years. It achieved revenue growth of 18% over the last year.
We would argue that the modest growth in revenue is a notable positive. And the modest growth in EPS isn't bad, either. Although we'll stop short of calling the stock a top performer, we think the company has potential. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Sturm, Ruger & Company, Inc. Been A Good Investment?
Sturm, Ruger & Company, Inc. has generated a total shareholder return of 32% over three years, so most shareholders would be reasonably content. 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.
As we noted earlier, Sturm Ruger pays its CEO in line with similar-sized companies belonging to the same industry. But the company has failed to produce substantial growth in either EPS or total shareholder return. Considering the steady performance, it's tough to call out CEO compensation as too high, but shareholders might want to see more robust growth metrics before agreeing to a future raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is potentially serious) in Sturm Ruger we think you should know about.
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.
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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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