This article will reflect on the compensation paid to Ted Fernandez who has served as CEO of The Hackett Group, Inc. (NASDAQ:HCKT) since 1997. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Hackett Group.
How Does Total Compensation For Ted Fernandez Compare With Other Companies In The Industry?
Our data indicates that The Hackett Group, Inc. has a market capitalization of US$393m, and total annual CEO compensation was reported as US$1.7m for the year to December 2019. Notably, that's a decrease of 16% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$750k.
On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$1.6m. This suggests that Hackett Group remunerates its CEO largely in line with the industry average. Furthermore, Ted Fernandez directly owns US$26m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. According to our research, Hackett Group has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
The Hackett Group, Inc.'s Growth
Over the last three years, The Hackett Group, Inc. has shrunk its earnings per share by 25% per year. In the last year, its revenue is down 4.5%.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has The Hackett Group, Inc. Been A Good Investment?
Given the total shareholder loss of 6.9% over three years, many shareholders in The Hackett Group, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As previously discussed, Ted is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Hackett Group that investors should think about before committing capital to this stock.
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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