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Does Houston Wire & Cable Company's (NASDAQ:HWCC) CEO Pay Reflect Performance?

Simply Wall St

Jim Pokluda became the CEO of Houston Wire & Cable Company (NASDAQ:HWCC) in 2012. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Houston Wire & Cable

How Does Jim Pokluda's Compensation Compare With Similar Sized Companies?

Our data indicates that Houston Wire & Cable Company is worth US$70m, and total annual CEO compensation was reported as US$1.4m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$515k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. 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$522k.

It would therefore appear that Houston Wire & Cable Company pays Jim Pokluda 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. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Houston Wire & Cable has changed from year to year.

NasdaqGS:HWCC CEO Compensation, January 3rd 2020

Is Houston Wire & Cable Company Growing?

Over the last three years Houston Wire & Cable Company has grown its earnings per share (EPS) by an average of 102% per year (using a line of best fit). In the last year, its revenue is down 2.0%.

This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Houston Wire & Cable Company Been A Good Investment?

With a three year total loss of 36%, Houston Wire & Cable Company would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared the total CEO remuneration paid by Houston Wire & Cable Company, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Houston Wire & Cable.

Important note: Houston Wire & Cable 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.

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.

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. Thank you for reading.