How Much is The L.S. Starrett Company's (NYSE:SCX) CEO Getting Paid?
Douglas Starrett has been the CEO of The L.S. Starrett Company (NYSE:SCX) since 2001. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for L.S. Starrett
How Does Douglas Starrett's Compensation Compare With Similar Sized Companies?
Our data indicates that The L.S. Starrett Company is worth US$27m, and total annual CEO compensation was reported as US$1.5m for the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$425k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$609k.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 16% of total compensation out of all the companies we analysed, while other remuneration made up 84% of the pie. L.S. Starrett pays out 29% of aggregate payment in the shape of a salary, which is significantly higher than the industry average.
It would therefore appear that The L.S. Starrett Company pays Douglas Starrett more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see a visual representation of the CEO compensation at L.S. Starrett, below.
Is The L.S. Starrett Company Growing?
Over the last three years The L.S. Starrett Company has seen earnings per share (EPS) move in a positive direction by an average of 103% per year (using a line of best fit). It achieved revenue growth of 3.5% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has The L.S. Starrett Company Been A Good Investment?
Given the total loss of 61% over three years, many shareholders in The L.S. Starrett Company are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
We compared the total CEO remuneration paid by The L.S. Starrett Company, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Looking into other areas, we've picked out 2 warning signs for L.S. Starrett that investors should think about before committing capital to this stock.
If you want to buy a stock that is better than L.S. Starrett, this free list of high return, low debt companies is a great place to look.
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.
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. Thank you for reading.
