Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
In 2001 E. Chestnut was appointed CEO of Crown Crafts, Inc. (NASDAQ:CRWS). 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 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.
How Does E. Chestnut’s Compensation Compare With Similar Sized Companies?
According to our data, Crown Crafts, Inc. has a market capitalization of US$57m, and pays its CEO total annual compensation worth US$487k. (This is based on the year to 2018). Notably, the salary of US$464k is the vast majority of the CEO compensation. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO compensation to be US$299k.
It would therefore appear that Crown Crafts, Inc. pays E. Chestnut more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Crown Crafts has changed from year to year.
Is Crown Crafts, Inc. Growing?
Over the last three years Crown Crafts, Inc. has shrunk its earnings per share by an average of 26% per year (measured with a line of best fit). It achieved revenue growth of 19% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Crown Crafts, Inc. Been A Good Investment?
With a three year total loss of 14%, Crown Crafts, Inc. would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at Crown Crafts, Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
Arguably worse, investors are without a positive return for the last three years. Some might well form the view that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling Crown Crafts shares (free trial).
Important note: Crown Crafts 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.