Archie Black became the CEO of SPS Commerce, Inc. (NASDAQ:SPSC) in 2001, 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 assess whether SPS Commerce pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for SPS Commerce
How Does Total Compensation For Archie Black Compare With Other Companies In The Industry?
At the time of writing, our data shows that SPS Commerce, Inc. has a market capitalization of US$2.7b, and reported total annual CEO compensation of US$3.7m for the year to December 2019. We note that's a decrease of 19% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$495k.
For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.7m. This suggests that Archie Black is paid below the industry median. Furthermore, Archie Black directly owns US$2.7m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$495k | US$495k | 14% |
| Other | US$3.2m | US$4.0m | 86% |
| Total Compensation | US$3.7m | US$4.5m | 100% |
Talking in terms of the industry, salary represented approximately 11% of total compensation out of all the companies we analyzed, while other remuneration made up 89% of the pie. According to our research, SPS Commerce has allocated a higher percentage of pay to salary in comparison to the wider industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
SPS Commerce, Inc.'s Growth
Over the past three years, SPS Commerce, Inc. has seen its earnings per share (EPS) grow by 60% per year. In the last year, its revenue is up 11%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has SPS Commerce, Inc. Been A Good Investment?
Boasting a total shareholder return of 159% over three years, SPS Commerce, Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
To Conclude...
As previously discussed, Archie is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Considering robust EPS growth, we believe Archie to be modestly paid. Given the strong history of shareholder returns, the shareholders are probably very happy with Archie's performance.
Whatever your view on compensation, you might want to check if insiders are buying or selling SPS Commerce shares (free trial).
Important note: SPS Commerce is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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Access Free AnalysisThis 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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