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This article will reflect on the compensation paid to John Hewitt who has served as CEO of Matrix Service Company (NASDAQ:MTRX) since 2011. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Matrix Service Company's CEO Compensation With the industry
Our data indicates that Matrix Service Company has a market capitalization of US$262m, and total annual CEO compensation was reported as US$2.5m for the year to June 2020. We note that's a decrease of 22% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$800k.
For comparison, other companies in the same industry with market capitalizations ranging between US$100m and US$400m had a median total CEO compensation of US$2.7m. So it looks like Matrix Service compensates John Hewitt in line with the median for the industry. What's more, John Hewitt holds US$2.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 21% of total compensation represents salary and 79% is other remuneration. It's interesting to note that Matrix Service pays out a greater portion of remuneration through salary, compared to the industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Matrix Service Company's Growth
Over the last three years, Matrix Service Company has shrunk its earnings per share by 36% per year. Its revenue is down 34% over the previous year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Matrix Service Company Been A Good Investment?
Since shareholders would have lost about 42% over three years, some Matrix Service Company investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, Matrix Service pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Matrix Service that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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