Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Archie Black has been the CEO of SPS Commerce, Inc. (NASDAQ:SPSC) since 2001. 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 process should give us an idea about how appropriately the CEO is paid.
How Does Archie Black’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that SPS Commerce, Inc. has a market cap of US$1.6b, and is paying total annual CEO compensation of US$5.3m. (This number is for the twelve months until 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$495k. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO compensation was US$3.5m.
Thus we can conclude that Archie Black receives more in total compensation than the median of a group of companies in the same market, and of similar size to SPS Commerce, Inc.. However, this doesn’t necessarily mean the pay 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 a visual representation of the CEO compensation at SPS Commerce, below.
Is SPS Commerce, Inc. Growing?
SPS Commerce, Inc. has reduced its earnings per share by an average of 16% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 13% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.
Has SPS Commerce, Inc. Been A Good Investment?
I think that the total shareholder return of 126%, over three years, would leave most SPS Commerce, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We examined the amount SPS Commerce, Inc. 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.We think many shareholders would be underwhelmed with the business growth over the last three years.
But clearly there are some positives, because investors have done well over the same time frame. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. Shareholders may want to check for free if SPS Commerce insiders are buying or selling shares.
Important note: SPS Commerce 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.