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Neil Wilkin has been the CEO of Optical Cable Corporation (NASDAQ:OCC) since 2003, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Optical Cable.
How Does Total Compensation For Neil Wilkin Compare With Other Companies In The Industry?
At the time of writing, our data shows that Optical Cable Corporation has a market capitalization of US$28m, and reported total annual CEO compensation of US$474k for the year to October 2020. That's a slight decrease of 7.3% on the prior year. In particular, the salary of US$455.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$424k. From this we gather that Neil Wilkin is paid around the median for CEOs in the industry. What's more, Neil Wilkin holds US$3.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 27% of total compensation out of all the companies we analyzed, while other remuneration made up 73% of the pie. Optical Cable pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Optical Cable Corporation's Growth Numbers
Optical Cable Corporation has reduced its earnings per share by 67% a year over the last three years. Its revenue is down 22% over the previous year.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Optical Cable Corporation Been A Good Investment?
Most shareholders would probably be pleased with Optical Cable Corporation for providing a total return of 45% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
Neil receives almost all of their compensation through a salary. As we noted earlier, Optical Cable pays its CEO in line with similar-sized companies belonging to the same industry. This doesn't look good when you see that EPS growth over the last three years has been negative. On the other hand, shareholder returns are showing positive trends over the same time frame. We wouldn't say CEO compensation is too high, but shareholders will probably want to see an increase in EPS before agreeing the business should pay any more.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for Optical Cable you should be aware of, and 2 of them don't sit too well with us.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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