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Does Nathan's Famous, Inc.'s (NASDAQ:NATH) CEO Pay Compare Well With Peers?

Simply Wall St
·4 min read

Eric Gatoff has been the CEO of Nathan's Famous, Inc. (NASDAQ:NATH) since 2007. First, this article will compare CEO compensation with compensation at similar sized companies. 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 method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Nathan's Famous

How Does Eric Gatoff's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Nathan's Famous, Inc. has a market cap of US$217m, and reported total annual CEO compensation of US$1.3m for the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$510k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$1.4m.

Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Nathan's Famous. Speaking on an industry level, we can see that nearly 25% of total compensation represents salary, while the remainder of 75% is other remuneration. According to our research, Nathan's Famous has allocated a higher percentage of pay to salary in comparison to the broader sector.

So Eric Gatoff is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance. You can see a visual representation of the CEO compensation at Nathan's Famous, below.

NasdaqGS:NATH CEO Compensation May 25th 2020
NasdaqGS:NATH CEO Compensation May 25th 2020

Is Nathan's Famous, Inc. Growing?

Over the last three years Nathan's Famous, Inc. has seen earnings per share (EPS) move in a positive direction by an average of 48% per year (using a line of best fit). In the last year, its revenue is up 4.0%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Nathan's Famous, Inc. Been A Good Investment?

With a three year total loss of 12%, Nathan's Famous, Inc. would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Eric Gatoff is paid around the same as most CEOs of similar size companies.

We think that the EPS growth is very pleasing, but we find the returns over the last three years to be lacking. Considering the improvement in earnings per share, one could argue that the CEO pay is appropriate, albeit not too low. Taking a breather from CEO compensation, we've spotted 5 warning signs for Nathan's Famous (of which 2 are a bit unpleasant!) you should know about in order to have a holistic understanding of the stock.

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

Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email 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. 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. Thank you for reading.