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Is Art's-Way Manufacturing Co., Inc.'s (NASDAQ:ARTW) CEO Being Overpaid?

Simply Wall St

Carrie Gunnerson became the CEO of Art's-Way Manufacturing Co., Inc. (NASDAQ:ARTW) in 2007. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Art's-Way Manufacturing

How Does Carrie Gunnerson's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Art's-Way Manufacturing Co., Inc. has a market cap of US$9.0m, and is paying total annual CEO compensation of US$199k. (This is based on the year to November 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$172k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$483k.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less 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 Art's-Way Manufacturing, below.

NasdaqCM:ARTW CEO Compensation, August 14th 2019

Is Art's-Way Manufacturing Co., Inc. Growing?

On average over the last three years, Art's-Way Manufacturing Co., Inc. has shrunk earnings per share by 66% each year (measured with a line of best fit). It saw its revenue drop -15% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Art's-Way Manufacturing Co., Inc. Been A Good Investment?

Given the total loss of 29% over three years, many shareholders in Art's-Way Manufacturing Co., Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Art's-Way Manufacturing Co., Inc. is currently paying its CEO below what is normal for companies of its size.

Carrie Gunnerson is paid less than CEOs of similar size companies, but the company isn't growing and total shareholder returns have been disappointing. Considering all these factors, we'd stop short of saying the CEO pay is too high, but we don't think shareholders would want to see a pay rise before business performance improves. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Art's-Way Manufacturing (free visualization of insider trades).

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.