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Howard Woltz has been the CEO of Insteel Industries, Inc. (NASDAQ:IIIN) since 1991. 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. This method should give us information to assess how appropriately the company pays the CEO.
How Does Howard Woltz's Compensation Compare With Similar Sized Companies?
Our data indicates that Insteel Industries, Inc. is worth US$386m, and total annual CEO compensation is US$2.3m. (This is based on the year to September 2018). While we always look at total compensation first, we note that the salary component is less, at US$607k. 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 Insteel Industries, Inc. pays Howard Woltz 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.
You can see, below, how CEO compensation at Insteel Industries has changed over time.
Is Insteel Industries, Inc. Growing?
On average over the last three years, Insteel Industries, Inc. has shrunk earnings per share by 6.2% each year (measured with a line of best fit). In the last year, its revenue is up 16%.
Unfortunately, earnings per share have trended lower over the last three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Insteel Industries, Inc. Been A Good Investment?
With a three year total loss of 20%, Insteel Industries, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount Insteel Industries, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. In our opinion the CEO might be paid too generously! Shareholders may want to check for free if Insteel Industries insiders are buying or selling shares.
Important note: Insteel Industries 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.
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 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.