Is Napco Security Technologies, Inc.'s (NASDAQ:NSSC) CEO Pay Fair?

In 1998 Richard Soloway was appointed CEO of Napco Security Technologies, Inc. (NASDAQ:NSSC). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Napco Security Technologies

How Does Richard Soloway's Compensation Compare With Similar Sized Companies?

According to our data, Napco Security Technologies, Inc. has a market capitalization of US$321m, and paid its CEO total annual compensation worth US$1.2m over the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$761k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$2.1m.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On a sector level, around 35% of total compensation represents salary and 65% is other remuneration. Napco Security Technologies pays out 66% of aggregate payment in the shape of a salary, which is significantly higher than the industry average.

Most shareholders would consider it a positive that Richard Soloway takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance. You can see a visual representation of the CEO compensation at Napco Security Technologies, below.

Is Napco Security Technologies, Inc. Growing?

Over the last three years Napco Security Technologies, Inc. has seen earnings per share (EPS) move in a positive direction by an average of 37% per year (using a line of best fit). It achieved revenue growth of 9.4% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Shareholders might be interested in this free visualization of analyst forecasts.

Has Napco Security Technologies, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Napco Security Technologies, Inc. for providing a total return of 70% over three years. 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.

In Summary...

It appears that Napco Security Technologies, Inc. remunerates its CEO below most similar sized companies.

Since the business is growing, many would argue this suggests the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Richard Soloway deserves a raise! It's not often we see shareholders do so well, and yet the CEO is paid modestly. The cherry on top would be if company insiders are buying shares with their own money. On another note, we've spotted 1 warning sign for Napco Security Technologies that investors should look into moving forward.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

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