What Can We Learn About Educational Development's (NASDAQ:EDUC) CEO Compensation?

Randall White became the CEO of Educational Development Corporation (NASDAQ:EDUC) in 1986, 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.

Check out our latest analysis for Educational Development

Comparing Educational Development Corporation's CEO Compensation With the industry

At the time of writing, our data shows that Educational Development Corporation has a market capitalization of US$113m, and reported total annual CEO compensation of US$346k for the year to February 2020. We note that's a decrease of 22% compared to last year. In particular, the salary of US$270.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$33k. Accordingly, our analysis reveals that Educational Development Corporation pays Randall White north of the industry median. Moreover, Randall White also holds US$19m worth of Educational Development stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represented approximately 43% of total compensation out of all the companies we analyzed, while other remuneration made up 57% of the pie. It's interesting to note that Educational Development pays out a greater portion of remuneration through salary, compared to the 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.

Educational Development Corporation's Growth

Educational Development Corporation has seen its earnings per share (EPS) increase by 29% a year over the past three years. Its revenue is up 58% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Educational Development Corporation Been A Good Investment?

Boasting a total shareholder return of 34% over three years, Educational Development Corporation has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

As we noted earlier, Educational Development pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, Educational Development has produced strong EPS growth and shareholder returns over the last three years. So, in acknowledgment of the overall excellent performance, we believe CEO compensation is appropriate. Given the strong history of shareholder returns, the shareholders are probably very happy with Randall's performance.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Educational Development that investors should look into moving forward.

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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