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Is Optical Cable Corporation's (NASDAQ:OCC) CEO Pay Justified?

Simply Wall St

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Neil Wilkin has been the CEO of Optical Cable Corporation (NASDAQ:OCC) since 2003. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. 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 Optical Cable

How Does Neil Wilkin's Compensation Compare With Similar Sized Companies?

According to our data, Optical Cable Corporation has a market capitalization of US$29m, and pays its CEO total annual compensation worth US$1.1m. (This number is for the twelve months until October 2018). While we always look at total compensation first, we note that the salary component is less, at US$442k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$463k.

Thus we can conclude that Neil Wilkin receives more in total compensation than the median of a group of companies in the same market, and of similar size to Optical Cable Corporation. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Optical Cable has changed from year to year.

NasdaqGM:OCC CEO Compensation, July 10th 2019

Is Optical Cable Corporation Growing?

Over the last three years Optical Cable Corporation has grown its earnings per share (EPS) by an average of 62% per year (using a line of best fit). In the last year, its revenue is up 1.3%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Optical Cable Corporation Been A Good Investment?

I think that the total shareholder return of 67%, over three years, would leave most Optical Cable Corporation shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

We compared the total CEO remuneration paid by Optical Cable Corporation, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Optical Cable shares (free trial).

Important note: Optical Cable may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.