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Does CSP Inc.'s (NASDAQ:CSPI) CEO Pay Reflect Performance?

Simply Wall St

Vic Dellovo has been the CEO of CSP Inc. (NASDAQ:CSPI) since 2012. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for CSP

How Does Vic Dellovo's Compensation Compare With Similar Sized Companies?

According to our data, CSP Inc. has a market capitalization of US$54m, and paid its CEO total annual compensation worth US$1.5m over the year to September 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$440k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$510k.

As you can see, Vic Dellovo is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean CSP 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 CSP has changed over time.

NasdaqGM:CSPI CEO Compensation, October 29th 2019

Is CSP Inc. Growing?

Over the last three years CSP Inc. has shrunk its earnings per share by an average of 103% per year (measured with a line of best fit). It saw its revenue drop 6.2% 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has CSP Inc. Been A Good Investment?

Boasting a total shareholder return of 38% over three years, CSP Inc. has done well by shareholders. 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 CSP 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.

We think many shareholders would be underwhelmed with the business growth 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. Whatever your view on compensation, you might want to check if insiders are buying or selling CSP shares (free trial).

Important note: CSP 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 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.