U.S. Markets closed

Is Sterling Construction Company, Inc.'s (NASDAQ:STRL) CEO Pay Justified?

Simply Wall St

In 2017 Joe Cutillo was appointed CEO of Sterling Construction Company, Inc. (NASDAQ:STRL). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Sterling Construction Company

How Does Joe Cutillo's Compensation Compare With Similar Sized Companies?

Our data indicates that Sterling Construction Company, Inc. is worth US$396m, and total annual CEO compensation was reported as US$8.3m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$632k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$1.7m.

Thus we can conclude that Joe Cutillo receives more in total compensation than the median of a group of companies in the same market, and of similar size to Sterling Construction Company, Inc.. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at Sterling Construction Company has changed over time.

NasdaqGS:STRL CEO Compensation, January 23rd 2020

Is Sterling Construction Company, Inc. Growing?

Sterling Construction Company, Inc. has increased its earnings per share (EPS) by an average of 96% a year, over the last three years (using a line of best fit). Revenue was pretty flat on last year.

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. You might want to check this free visual report on analyst forecasts for future earnings.

Has Sterling Construction Company, Inc. Been A Good Investment?

Boasting a total shareholder return of 54% over three years, Sterling Construction Company, Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

We compared the total CEO remuneration paid by Sterling Construction Company, 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.

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. As a result of this good performance, the CEO remuneration may well be quite reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Sterling Construction Company (free visualization of insider trades).

If you want to buy a stock that is better than Sterling Construction Company, this free list of high return, low debt companies is a great place to look.

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.

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. Thank you for reading.