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How Should Investors React To Universal Security Instruments, Inc.’s (NYSEMKT:UUU) CEO Pay?

Ingrid Hart

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In 2004 Harvey Grossblatt was appointed CEO of Universal Security Instruments, Inc. (NYSEMKT:UUU). First, this article will compare CEO compensation with compensation at similar sized companies. 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.

View our latest analysis for Universal Security Instruments

How Does Harvey Grossblatt’s Compensation Compare With Similar Sized Companies?

Our data indicates that Universal Security Instruments, Inc. is worth US$3.0m, and total annual CEO compensation is US$418k. (This number is for the twelve months until 2018). While we always look at total compensation first, we note that the salary component is less, at US$353k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO compensation was US$300k.

As you can see, Harvey Grossblatt is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Universal Security Instruments, Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Universal Security Instruments has changed from year to year.

AMEX:UUU CEO Compensation February 13th 19

Is Universal Security Instruments, Inc. Growing?

Over the last three years, Universal Security Instruments, Inc. has not seen its earnings per share change much, though they have deteriorated slightly, according to a line of best fit. It achieved revenue growth of 22% over the last year.

Unfortunately there is a complete lack of earnings per share improvement, over three years. And while it’s good to see some good revenue growth recently, the growth isn’t really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don’t have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Universal Security Instruments, Inc. Been A Good Investment?

Given the total loss of 65% over three years, many shareholders in Universal Security Instruments, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We compared the total CEO remuneration paid by Universal Security Instruments, Inc., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

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! So you may want to check if insiders are buying Universal Security Instruments shares with their own money (free access).

Important note: Universal Security Instruments 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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.