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Tim McGrath became the CEO of PC Connection, Inc. (NASDAQ:CNXN) in 2011. 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Tim McGrath's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that PC Connection, Inc. has a market cap of US$900m, and is paying total annual CEO compensation of US$4.5m. (This number is for the twelve months until December 2018). We note that's an increase of 173% above last year. We think total compensation is more important but we note that the CEO salary is lower, at US$945k. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.7m.
As you can see, Tim McGrath is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean PC Connection, Inc. is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at PC Connection has changed from year to year.
Is PC Connection, Inc. Growing?
On average over the last three years, PC Connection, Inc. has grown earnings per share (EPS) by 13% each year (using a line of best fit). In the last year, its revenue is down -5.5%.
This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important. It could be important to check this free visual depiction of what analysts expect for the future.
Has PC Connection, Inc. Been A Good Investment?
I think that the total shareholder return of 48%, over three years, would leave most PC Connection, Inc. 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.
We compared total CEO remuneration at PC Connection, Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. 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. So you may want to check if insiders are buying PC Connection shares with their own money (free access).
If you want to buy a stock that is better than PC Connection, this free list of high return, low debt companies is a great place to look.
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 email@example.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.