Walter Johnsen has been the CEO of Acme United Corporation (NYSEMKT:ACU) since 1995, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Walter Johnsen Compare With Other Companies In The Industry?
Our data indicates that Acme United Corporation has a market capitalization of US$76m, and total annual CEO compensation was reported as US$1.1m for the year to December 2019. That's a slight decrease of 3.1% on the prior year. Notably, the salary which is US$749.1k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$837k. From this we gather that Walter Johnsen is paid around the median for CEOs in the industry. Moreover, Walter Johnsen also holds US$7.0m worth of Acme United stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. Acme United pays out 70% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Acme United Corporation's Growth
Acme United Corporation's earnings per share (EPS) grew 5.5% per year over the last three years. Its revenue is up 9.6% over the last year.
We're not particularly impressed by the revenue growth, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Acme United Corporation Been A Good Investment?
With a total shareholder return of 1.3% over three years, Acme United Corporation has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As previously discussed, Walter is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS and shareholder returns have been stable over the last three years, but have not grown substantially. Considering the steady performance, it's tough to call out CEO compensation as too high, but shareholders might want to see more robust growth metrics before agreeing to a future raise.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Acme United that investors should look into moving forward.
Switching gears from Acme United, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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