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Is Payment Data Systems, Inc.’s (NASDAQ:PYDS) CEO Overpaid Relative To Its Peers?

Casey Hall

In 2016 Louis Hoch was appointed CEO of Payment Data Systems, Inc. (NASDAQ:PYDS). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. 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.

See our latest analysis for Payment Data Systems

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How Does Louis Hoch’s Compensation Compare With Similar Sized Companies?

Our data indicates that Payment Data Systems, Inc. is worth US$36m, and total annual CEO compensation is US$636k. (This is based on the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$350k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO compensation in that group is US$301k.

It would therefore appear that Payment Data Systems, Inc. pays Louis Hoch 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, below, how CEO compensation at Payment Data Systems has changed over time.

NASDAQCM:PYDS CEO Compensation January 30th 19

Is Payment Data Systems, Inc. Growing?

Payment Data Systems, Inc. has reduced its earnings per share by an average of 104% a year, over the last three years. In the last year, its revenue is up 105%.

The reduction in earnings per share, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can’t form a strong opinion about business performance yet; but it’s one worth watching.

It could be important to check this free visual depiction of what analysts expect for the future.

Has Payment Data Systems, Inc. Been A Good Investment?

With a total shareholder return of 4.2% over three years, Payment Data Systems, Inc. has done okay by shareholders. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.

In Summary…

We compared the total CEO remuneration paid by Payment Data Systems, Inc., 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.

Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. Considering this, we wouldn’t want to see any big pay rises, although we’d stop short of calling the CEO compensation unfair. So you may want to check if insiders are buying Payment Data Systems shares with their own money (free access).

Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.