In 2006 Gary Kolstad was appointed CEO of CARBO Ceramics Inc. (NYSE:CRR). 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. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Gary Kolstad’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that CARBO Ceramics Inc. has a market cap of US$107m, and is paying total annual CEO compensation of US$3.6m. (This number is for the twelve months until December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$838k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$419k.
As you can see, Gary Kolstad is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean CARBO Ceramics Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at CARBO Ceramics has changed over time.
Is CARBO Ceramics Inc. Growing?
On average over the last three years, CARBO Ceramics Inc. has shrunk earnings per share by 10% each year (measured with a line of best fit). It achieved revenue growth of 12% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has CARBO Ceramics Inc. Been A Good Investment?
Given the total loss of 79% over three years, many shareholders in CARBO Ceramics Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We examined the amount CARBO Ceramics Inc. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. This analysis suggests to us that the CEO is paid too generously! So you may want to check if insiders are buying CARBO Ceramics shares with their own money (free access).
Important note: CARBO Ceramics may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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 email@example.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.