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Steve Oswald became the CEO of Ducommun Incorporated (NYSE:DCO) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Ducommun Incorporated's CEO Compensation With the industry
Our data indicates that Ducommun Incorporated has a market capitalization of US$401m, and total annual CEO compensation was reported as US$5.7m for the year to December 2019. That's a notable increase of 15% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$806k.
On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$2.4m. Hence, we can conclude that Steve Oswald is remunerated higher than the industry median. Moreover, Steve Oswald also holds US$7.3m worth of Ducommun stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 21% of total compensation represents salary, while the remainder of 79% is other remuneration. Ducommun sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Ducommun Incorporated's Growth Numbers
Ducommun Incorporated's earnings per share (EPS) grew 32% per year over the last three years. It achieved revenue growth of 11% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Ducommun Incorporated Been A Good Investment?
Ducommun Incorporated has served shareholders reasonably well, with a total return of 16% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
As we noted earlier, Ducommun pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, we must not forget that the EPS growth has been very strong over three years. We also note that, over the same time frame, shareholder returns haven't been bad. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't say CEO compensation problematic.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which is a bit unpleasant) in Ducommun we think you should know about.
Important note: Ducommun is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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