A Quick Analysis On Educational Development's (NASDAQ:EDUC) CEO Salary
Randall White became the CEO of Educational Development Corporation (NASDAQ:EDUC) in 1986, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for Educational Development
Comparing Educational Development Corporation's CEO Compensation With the industry
At the time of writing, our data shows that Educational Development Corporation has a market capitalization of US$156m, and reported total annual CEO compensation of US$346k for the year to February 2020. We note that's a decrease of 22% compared to last year. Notably, the salary which is US$270.0k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$64k. This suggests that Randall White is paid more than the median for the industry. Furthermore, Randall White directly owns US$27m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$270k | US$263k | 78% |
Other | US$76k | US$178k | 22% |
Total Compensation | US$346k | US$441k | 100% |
Speaking on an industry level, nearly 45% of total compensation represents salary, while the remainder of 55% is other remuneration. It's interesting to note that Educational Development pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Educational Development Corporation's Growth Numbers
Educational Development Corporation has seen its earnings per share (EPS) increase by 30% a year over the past three years. In the last year, its revenue is up 37%.
Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Educational Development Corporation Been A Good Investment?
We think that the total shareholder return of 325%, over three years, would leave most Educational Development 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...
As previously discussed, Randall is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But EPS growth and shareholder returns have been top-notch for the past three years. Considering such exceptional results for the company, we'd venture to say CEO compensation is fair. Given the strong history of shareholder returns, the shareholders are probably very happy with Randall's performance.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 3 warning signs for Educational Development that investors should be aware of in a dynamic business environment.
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.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
