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Performance at American Superconductor Corporation (NASDAQ:AMSC) has been reasonably good and CEO Dan McGahn has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 30 July 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. We present our case of why we think CEO compensation looks fair.
Comparing American Superconductor Corporation's CEO Compensation With the industry
At the time of writing, our data shows that American Superconductor Corporation has a market capitalization of US$399m, and reported total annual CEO compensation of US$2.9m for the year to March 2021. Notably, that's an increase of 39% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$525k.
On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$2.3m. This suggests that American Superconductor remunerates its CEO largely in line with the industry average. Moreover, Dan McGahn also holds US$9.9m worth of American Superconductor stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. American Superconductor sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
American Superconductor Corporation's Growth
American Superconductor Corporation has reduced its earnings per share by 28% a year over the last three years. In the last year, its revenue is up 36%.
Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 American Superconductor Corporation Been A Good Investment?
We think that the total shareholder return of 181%, over three years, would leave most American Superconductor Corporation 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.
The overall company performance has been commendable, however there are still areas for improvement. Despite robust revenue growth, until EPS growth improves, shareholders may be hesitant to increase CEO pay by too much.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 3 warning signs for American Superconductor that you should be aware of before investing.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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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