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Is DLH Holdings Corp.'s (NASDAQ:DLHC) CEO Overpaid Relative To Its Peers?

Simply Wall St

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In 2010 Zach Parker was appointed CEO of DLH Holdings Corp. (NASDAQ:DLHC). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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.

See our latest analysis for DLH Holdings

How Does Zach Parker's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that DLH Holdings Corp. has a market cap of US$76m, and is paying total annual CEO compensation of US$959k. (This figure is for the year to September 2018). While we always look at total compensation first, we note that the salary component is less, at US$425k. 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$429k.

It would therefore appear that DLH Holdings Corp. pays Zach Parker 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.

You can see a visual representation of the CEO compensation at DLH Holdings, below.

NasdaqCM:DLHC CEO Compensation, May 2nd 2019

Is DLH Holdings Corp. Growing?

DLH Holdings Corp. has reduced its earnings per share by an average of 59% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 14% over the last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.

Has DLH Holdings Corp. Been A Good Investment?

I think that the total shareholder return of 58%, over three years, would leave most DLH Holdings Corp. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

We compared total CEO remuneration at DLH Holdings Corp. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

However, we can't argue with the strong returns to shareholders, over the same time period. Considering this, shareholders are probably not too worried about the CEO compensation. Shareholders may want to check for free if DLH Holdings insiders are buying or selling shares.

If you want to buy a stock that is better than DLH Holdings, this free list of high return, low debt companies is a great place to look.

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.