Is SPS Commerce, Inc.’s (NASDAQ:SPSC) CEO Pay Justified?

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Archie Black has been the CEO of SPS Commerce, Inc. (NASDAQ:SPSC) since 2001. 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.

Check out our latest analysis for SPS Commerce

How Does Archie Black’s Compensation Compare With Similar Sized Companies?

Our data indicates that SPS Commerce, Inc. is worth US$1.9b, and total annual CEO compensation is US$4.5m. (This figure is for the year to December 2018). That’s actually a decrease on the year before. While we always look at total compensation first, we note that the salary component is less, at US$495k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$3.9m.

So Archie Black receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see, below, how CEO compensation at SPS Commerce has changed over time.

NasdaqGS:SPSC CEO Compensation, May 8th 2019
NasdaqGS:SPSC CEO Compensation, May 8th 2019

Is SPS Commerce, Inc. Growing?

On average over the last three years, SPS Commerce, Inc. has grown earnings per share (EPS) by 52% each year (using a line of best fit). Its revenue is up 13% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 107%, over three years, would leave most SPS Commerce, Inc. shareholders smiling. 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.

In Summary…

Archie Black is paid around what is normal the leaders of comparable size companies.

Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. Indeed, many might consider the pay rather modest, given the solid company performance! Whatever your view on compensation, you might want to check if insiders are buying or selling SPS Commerce shares (free trial).

If you want to buy a stock that is better than SPS Commerce, this free list of high return, low debt companies is a great place to look.

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.