Is Luby's, Inc.'s (NYSE:LUB) CEO Overpaid Relative To Its Peers?
Chris Pappas became the CEO of Luby's, Inc. (NYSE:LUB) in 2001. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
View our latest analysis for Luby's
How Does Chris Pappas's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Luby's, Inc. has a market cap of US$58m, and reported total annual CEO compensation of US$784k for the year to August 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$500k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$510k.
As you can see, Chris Pappas is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Luby's, Inc. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Luby's has changed from year to year.
Is Luby's, Inc. Growing?
Luby's, Inc. has reduced its earnings per share by an average of 19% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down 8.7%.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Luby's, Inc. Been A Good Investment?
Given the total loss of 55% over three years, many shareholders in Luby's, 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 Luby's, Inc., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. Arguably worse, investors are without a positive return for the last three years. In our opinion the CEO might be paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Luby's.
Important note: Luby's 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.
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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.
