Is Ennis, Inc.'s (NYSE:EBF) CEO Pay Justified?
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Keith Walters has been the CEO of Ennis, Inc. (NYSE:EBF) since 1997. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
View our latest analysis for Ennis
How Does Keith Walters's Compensation Compare With Similar Sized Companies?
According to our data, Ennis, Inc. has a market capitalization of US$514m, and pays its CEO total annual compensation worth US$3.4m. (This is based on the year to February 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$916k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$1.7m.
It would therefore appear that Ennis, Inc. pays Keith Walters more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Ennis has changed from year to year.
Is Ennis, Inc. Growing?
Ennis, Inc. has increased its earnings per share (EPS) by an average of 10% a year, over the last three years (using a line of best fit). It achieved revenue growth of 8.3% 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 modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.
Has Ennis, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Ennis, Inc. for providing a total return of 34% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
We compared the total CEO remuneration paid by Ennis, Inc., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Even better, returns to shareholders have been plentiful, over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Ennis.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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.
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. Thank you for reading.
