David Klenk has been the CEO of Electro-Sensors, Inc. (NASDAQ:ELSE) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Electro-Sensors.
How Does Total Compensation For David Klenk Compare With Other Companies In The Industry?
Our data indicates that Electro-Sensors, Inc. has a market capitalization of US$13m, and total annual CEO compensation was reported as US$272k for the year to December 2019. That's a fairly small increase of 7.0% over the previous year. Notably, the salary which is US$225.0k, represents most of the total compensation being paid.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$396k. In other words, Electro-Sensors pays its CEO lower than the industry median.
On an industry level, roughly 33% of total compensation represents salary and 67% is other remuneration. Electro-Sensors pays out 83% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Electro-Sensors, Inc.'s Growth Numbers
Over the last three years, Electro-Sensors, Inc. has shrunk its earnings per share by 36% per year. Its revenue is down 3.9% over the previous year.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Electro-Sensors, Inc. Been A Good Investment?
Given the total shareholder loss of 3.0% over three years, many shareholders in Electro-Sensors, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, Electro-Sensors, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. While we are quite underwhelmed with EPS growth, the shareholder returns over the past three years have also failed to impress us. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for Electro-Sensors (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.
Important note: Electro-Sensors 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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