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Randall White became the CEO of Educational Development Corporation (NASDAQ:EDUC) in 1986. First, this article will compare CEO compensation with compensation at similar sized companies. 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.
How Does Randall White's Compensation Compare With Similar Sized Companies?
Our data indicates that Educational Development Corporation is worth US$57m, and total annual CEO compensation is US$273k. (This figure is for the year to February 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$218k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$465k.
Most shareholders would consider it a positive that Randall White takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
The graphic below shows how CEO compensation at Educational Development has changed from year to year.
Is Educational Development Corporation Growing?
Over the last three years Educational Development Corporation has grown its earnings per share (EPS) by an average of 43% per year (using a line of best fit). In the last year, its revenue is up 6.1%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Educational Development Corporation Been A Good Investment?
Educational Development Corporation has served shareholders reasonably well, with a total return of 28% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
It appears that Educational Development Corporation remunerates its CEO below most similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. The total shareholder return might not be amazing, but that doesn't mean that Randall White is paid too much.
It's good to see reasonable payment of the CEO, even while the business improves. But for me, it's even better if insiders are also buying shares with their own cold, hard, cash. So you may want to check if insiders are buying Educational Development shares with their own money (free access).
Important note: Educational Development may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.