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Does Insteel Industries, Inc.'s (NASDAQ:IIIN) CEO Pay Compare Well With Peers?

Simply Wall St

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In 1991 Howard Woltz was appointed CEO of Insteel Industries, Inc. (NASDAQ:IIIN). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. 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 Insteel Industries

How Does Howard Woltz's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Insteel Industries, Inc. has a market cap of US$402m, and is paying total annual CEO compensation of US$2.3m. (This number is for the twelve months until September 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$607k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$1.6m.

It would therefore appear that Insteel Industries, Inc. pays Howard Woltz 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 get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Insteel Industries has changed from year to year.

NasdaqGS:IIIN CEO Compensation, April 1st 2019
NasdaqGS:IIIN CEO Compensation, April 1st 2019

Is Insteel Industries, Inc. Growing?

On average over the last three years, Insteel Industries, Inc. has shrunk earnings per share by 1.7% each year (measured with a line of best fit). Its revenue is up 17% over last year.

In the last three years the company has failed to grow earnings per s. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.

Has Insteel Industries, Inc. Been A Good Investment?

Since shareholders would have lost about 22% over three years, some Insteel Industries, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared the total CEO remuneration paid by Insteel Industries, Inc., and compared it to remuneration at a group of similar sized companies. 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.

Arguably worse, investors are without a positive return for the last three years. In our opinion the CEO might be paid too generously! So you may want to check if insiders are buying Insteel Industries shares with their own money (free access).

Important note: Insteel Industries 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.