Frank Saxon has been the CEO of Culp, Inc. (NYSE:CULP) since 2007. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Frank Saxon's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Culp, Inc. has a market cap of US$198m, and reported total annual CEO compensation of US$1.1m for the year to April 2019. While we always look at total compensation first, we note that the salary component is less, at US$442k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$1.1m.
So Frank Saxon is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at Culp has changed from year to year.
Is Culp, Inc. Growing?
Culp, Inc. has reduced its earnings per share by an average of 22% a year, over the last three years (measured with a line of best fit). It saw its revenue drop 4.9% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Culp, Inc. Been A Good Investment?
With a three year total loss of 48%, Culp, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
Frank Saxon is paid around what is normal the leaders of comparable size companies.
After looking at EPS and total shareholder returns, it's certainly hard to argue the company has performed well, since both metrics are down. Suffice it to say, we don't think the CEO is underpaid! Shareholders may want to check for free if Culp insiders are buying or selling shares.
Important note: Culp 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.
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