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Is MTS Systems Corporation's (NASDAQ:MTSC) CEO Being Overpaid?

Simply Wall St

Jeff Graves became the CEO of MTS Systems Corporation (NASDAQ:MTSC) in 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for MTS Systems

How Does Jeff Graves's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that MTS Systems Corporation has a market cap of US$1.1b, and reported total annual CEO compensation of US$2.9m for the year to September 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$691k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.7m.

That means Jeff Graves receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

You can see a visual representation of the CEO compensation at MTS Systems, below.

NasdaqGS:MTSC CEO Compensation, October 31st 2019

Is MTS Systems Corporation Growing?

Over the last three years MTS Systems Corporation has grown its earnings per share (EPS) by an average of 22% per year (using a line of best fit). It achieved revenue growth of 11% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. It could be important to check this free visual depiction of what analysts expect for the future.

Has MTS Systems Corporation Been A Good Investment?

With a total shareholder return of 33% over three years, MTS Systems Corporation shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Remuneration for Jeff Graves is close enough to the median pay for a CEO of a similar sized company .

We would wish for better returns (whether dividends or capital gains) but we do admire the solid EPS growth on show here. As a result of these considerations, I would suggest the CEO pay is reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling MTS Systems shares (free trial).

If you want to buy a stock that is better than MTS Systems, this free list of high return, low debt companies is a great place to look.

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.