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David Little became the CEO of DXP Enterprises, Inc. (NASDAQ:DXPE) in 1996, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for DXP Enterprises.
How Does Total Compensation For David Little Compare With Other Companies In The Industry?
At the time of writing, our data shows that DXP Enterprises, Inc. has a market capitalization of US$319m, and reported total annual CEO compensation of US$2.8m for the year to December 2019. That's a notable increase of 34% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$638k.
In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$1.1m. Accordingly, our analysis reveals that DXP Enterprises, Inc. pays David Little north of the industry median. Furthermore, David Little directly owns US$23m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 22% of total compensation out of all the companies we analyzed, while other remuneration made up 78% of the pie. DXP Enterprises is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
DXP Enterprises, Inc.'s Growth
DXP Enterprises, Inc. has seen its earnings per share (EPS) increase by 13% a year over the past three years. Its revenue is down 7.0% over the previous year.
This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has DXP Enterprises, Inc. Been A Good Investment?
With a three year total loss of 44% for the shareholders, DXP Enterprises, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, DXP Enterprises pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed with its EPS growth, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Although we'd stop short of calling it inappropriate, we think David is earning a very handsome sum.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for DXP Enterprises (of which 2 are significant!) that you should know about in order to have a holistic understanding of the stock.
Important note: DXP Enterprises is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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