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Is Electro-Sensors, Inc.'s (NASDAQ:ELSE) CEO Paid Enough Relative To Peers?

Simply Wall St

In 2013 David Klenk was appointed CEO of Electro-Sensors, Inc. (NASDAQ:ELSE). 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Electro-Sensors

How Does David Klenk's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Electro-Sensors, Inc. has a market cap of US$12m, and reported total annual CEO compensation of US$254k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$220k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$509k.

A first glance this seems like a real positive for shareholders, since David Klenk is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see, below, how CEO compensation at Electro-Sensors has changed over time.

NasdaqCM:ELSE CEO Compensation, December 9th 2019

Is Electro-Sensors, Inc. Growing?

Electro-Sensors, Inc. has reduced its earnings per share by an average of 16% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 10% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. 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 shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Electro-Sensors, Inc. Been A Good Investment?

With a total shareholder return of 11% over three years, Electro-Sensors, Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

It appears that Electro-Sensors, Inc. remunerates its CEO below most similar sized companies.

The compensation paid to David Klenk is lower than is usual at similar sized companies. But the business isn't growing earnings per share, and the returns to shareholders haven't been wonderful. There is room for improved company performance, but we don't see the CEO pay as a big issue here. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Electro-Sensors.

If you want to buy a stock that is better than Electro-Sensors, this free list of high return, low debt companies is a great place to look.

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.

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. Thank you for reading.