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Brian Recatto became the CEO of Heritage-Crystal Clean, Inc (NASDAQ:HCCI) 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 Heritage-Crystal Clean, Inc's CEO Compensation With the industry
According to our data, Heritage-Crystal Clean, Inc has a market capitalization of US$357m, and paid its CEO total annual compensation worth US$2.3m over the year to December 2019. We note that's a small decrease of 5.7% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$437k.
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$3.6m. Accordingly, Heritage-Crystal Clean pays its CEO under the industry median. Moreover, Brian Recatto also holds US$7.9m worth of Heritage-Crystal Clean stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 23% of total compensation represents salary and 77% is other remuneration. In Heritage-Crystal Clean's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Heritage-Crystal Clean, Inc's Growth
Over the last three years, Heritage-Crystal Clean, Inc has shrunk its earnings per share by 29% per year. Revenue was pretty flat on last year.
Overall this is not a very positive result for shareholders. And the flat revenue hardly impresses. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Heritage-Crystal Clean, Inc Been A Good Investment?
With a three year total loss of 24% for the shareholders, Heritage-Crystal Clean, Inc would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As previously discussed, Brian is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Over the last three years, shareholder returns have been downright disappointing, and EPSgrowth has been equally disappointing. It's tough to say that Brian is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Heritage-Crystal Clean that investors should be aware of in a dynamic business environment.
Important note: Heritage-Crystal Clean 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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