How Should Investors React To Northern Technologies International Corporation's (NASDAQ:NTIC) CEO Pay?
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G. Lynch has been the CEO of Northern Technologies International Corporation (NASDAQ:NTIC) since 2006. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Northern Technologies International
How Does G. Lynch's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Northern Technologies International Corporation has a market cap of US$122m, and is paying total annual CEO compensation of US$862k. (This figure is for the year to August 2018). While we always look at total compensation first, we note that the salary component is less, at US$390k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$429k.
It would therefore appear that Northern Technologies International Corporation pays G. Lynch 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 get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Northern Technologies International has changed from year to year.
Is Northern Technologies International Corporation Growing?
Over the last three years Northern Technologies International Corporation has grown its earnings per share (EPS) by an average of 90% per year (using a line of best fit). It achieved revenue growth of 23% over the last year.
This demonstrates that the company has been improving recently. A good result. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Although we don't have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Northern Technologies International Corporation Been A Good Investment?
I think that the total shareholder return of 95%, over three years, would leave most Northern Technologies International Corporation shareholders smiling. 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 examined the amount Northern Technologies International Corporation pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. 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 Northern Technologies International.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.
