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How Should Investors Feel About ARC Document Solutions' (NYSE:ARC) CEO Remuneration?

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Simply Wall St
·3 min read
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This article will reflect on the compensation paid to Suri Kumarakulasingam who has served as CEO of ARC Document Solutions, Inc. (NYSE:ARC) since 2007. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for ARC Document Solutions.

View our latest analysis for ARC Document Solutions

How Does Total Compensation For Suri Kumarakulasingam Compare With Other Companies In The Industry?

Our data indicates that ARC Document Solutions, Inc. has a market capitalization of US$60m, and total annual CEO compensation was reported as US$1.7m for the year to December 2019. Notably, that's a decrease of 26% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$800k.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$571k. This suggests that Suri Kumarakulasingam is paid more than the median for the industry. What's more, Suri Kumarakulasingam holds US$6.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2019

2018

Proportion (2019)

Salary

US$800k

US$823k

46%

Other

US$942k

US$1.5m

54%

Total Compensation

US$1.7m

US$2.4m

100%

On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. It's interesting to note that ARC Document Solutions pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

ARC Document Solutions, Inc.'s Growth

ARC Document Solutions, Inc. has seen its earnings per share (EPS) increase by 93% a year over the past three years. It saw its revenue drop 18% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 ARC Document Solutions, Inc. Been A Good Investment?

Given the total shareholder loss of 43% over three years, many shareholders in ARC Document Solutions, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Suri is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, we must not forget that the EPS growth has been very strong, but shareholder returns — over the same period — have been disappointing. Although we'd stop short of calling it inappropriate, we think Suri is earning a very handsome sum.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for ARC Document Solutions you should be aware of, and 1 of them shouldn't be ignored.

Important note: ARC Document Solutions 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.