What We Learned About Optical Cable's (NASDAQ:OCC) CEO Compensation

Neil Wilkin has been the CEO of Optical Cable Corporation (NASDAQ:OCC) since 2003, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Optical Cable pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Optical Cable

How Does Total Compensation For Neil Wilkin Compare With Other Companies In The Industry?

At the time of writing, our data shows that Optical Cable Corporation has a market capitalization of US$28m, and reported total annual CEO compensation of US$474k for the year to October 2020. That's a slightly lower by 7.3% over the previous year. Notably, the salary which is US$455.0k, 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$424k. This suggests that Optical Cable remunerates its CEO largely in line with the industry average. Furthermore, Neil Wilkin directly owns US$3.5m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 27% of total compensation represents salary and 73% is other remuneration. Optical Cable has gone down a largely traditional route, paying Neil Wilkin a high salary, giving it preference over non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Optical Cable Corporation's Growth

Optical Cable Corporation has reduced its earnings per share by 67% a year over the last three years. It saw its revenue drop 22% over the last 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Optical Cable Corporation Been A Good Investment?

Most shareholders would probably be pleased with Optical Cable Corporation for providing a total return of 45% over three years. 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...

Neil receives almost all of their compensation through a salary. As we noted earlier, Optical Cable pays its CEO in line with similar-sized companies belonging to the same industry. This doesn't look good when you see that EPS growth over the last three years has been negative. But on the bright side, shareholder returns have moved northward during the same period. We wouldn't say CEO compensation is too high, but shrinking EPS is undoubtedly an issue that will have to be addressed.

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 4 warning signs for Optical Cable (of which 2 don't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Important note: Optical Cable 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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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. 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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