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Is Perma-Fix Environmental Services, Inc.'s (NASDAQ:PESI) CEO Overpaid Relative To Its Peers?

Simply Wall St

In 2017 Mark Duff was appointed CEO of Perma-Fix Environmental Services, Inc. (NASDAQ:PESI). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Perma-Fix Environmental Services

How Does Mark Duff's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Perma-Fix Environmental Services, Inc. has a market cap of US$51m, and reported total annual CEO compensation of US$305k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$275k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$617k.

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 23% of total compensation out of all the companies we analysed, while other remuneration made up 77% of the pie. Perma-Fix Environmental Services is paying a higher share of its remuneration through a salary in comparison to the overall industry.

Most shareholders would consider it a positive that Mark Duff takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business. You can see, below, how CEO compensation at Perma-Fix Environmental Services has changed over time.

NasdaqCM:PESI CEO Compensation, March 21st 2020

Is Perma-Fix Environmental Services, Inc. Growing?

On average over the last three years, Perma-Fix Environmental Services, Inc. has grown earnings per share (EPS) by 103% each year (using a line of best fit). In the last year, its revenue is up 48%.

This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Perma-Fix Environmental Services, Inc. Been A Good Investment?

I think that the total shareholder return of 35%, over three years, would leave most Perma-Fix Environmental Services, 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.

In Summary...

It appears that Perma-Fix Environmental Services, Inc. remunerates its CEO below most similar sized companies.

Considering the underlying business is growing earnings, this would suggest the pay is modest. The strong history of shareholder returns might even have some thinking that Mark Duff deserves a raise! It is relatively rare to see a modestly paid CEO when performance is so impressive. It would be even more positive if company insiders are buying shares. Looking into other areas, we've picked out 2 warning signs for Perma-Fix Environmental Services that investors should think about before committing capital to this stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.

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