Tawny Lam has been the CEO of Nova LifeStyle, Inc. (NASDAQ:NVFY) since 2016. 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. This method should give us information to assess how appropriately the company pays the CEO.
How Does Tawny Lam's Compensation Compare With Similar Sized Companies?
Our data indicates that Nova LifeStyle, Inc. is worth US$23m, and total annual CEO compensation is US$141k. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$100k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$473k.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at Nova LifeStyle has changed over time.
Is Nova LifeStyle, Inc. Growing?
Over the last three years Nova LifeStyle, Inc. has grown its earnings per share (EPS) by an average of 55% per year (using a line of best fit). It saw its revenue drop -30% over the last year.
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, you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Nova LifeStyle, Inc. Been A Good Investment?
Nova LifeStyle, Inc. has generated a total shareholder return of 17% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
It looks like Nova LifeStyle, Inc. pays its CEO less than similar sized companies. Considering the underlying business is growing earnings, this would suggest the pay is modest. While returns over the last few years haven't been top notch, there is nothing to suggest to us that Tawny Lam is overcompensated.
Few would complain about reasonable CEO remuneration when the business is growing earnings per share. It would be an additional positive if insiders are buying shares. So you may want to check if insiders are buying Nova LifeStyle shares with their own money (free access).
If you want to buy a stock that is better than Nova LifeStyle, this free list of high return, low debt companies is a great place to look.
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