Donald Duda became the CEO of Methode Electronics, Inc. (NYSE:MEI) in 2004. 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. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Donald Duda's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Methode Electronics, Inc. has a market cap of US$1.2b, and reported total annual CEO compensation of US$1.4m for the year to April 2019. That's below the compensation, last year. While we always look at total compensation first, we note that the salary component is less, at US$760k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.1m.
A first glance this seems like a real positive for shareholders, since Donald Duda is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see a visual representation of the CEO compensation at Methode Electronics, below.
Is Methode Electronics, Inc. Growing?
Methode Electronics, Inc. has reduced its earnings per share by an average of 1.4% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 13%.
In the last three years the company has failed to grow earnings per share. 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. Shareholders might be interested in this free visualization of analyst forecasts.
Has Methode Electronics, Inc. Been A Good Investment?
With a three year total loss of 4.3%, Methode Electronics, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
Methode Electronics, Inc. is currently paying its CEO below what is normal for companies of its size.
The compensation paid to Donald Duda is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. So you may want to check if insiders are buying Methode Electronics shares with their own money (free access).
If you want to buy a stock that is better than Methode Electronics, this free list of high return, low debt companies is a great place to look.
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