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John Batten became the CEO of Twin Disc, Incorporated (NASDAQ:TWIN) in 2013. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does John Batten’s Compensation Compare With Similar Sized Companies?
Our data indicates that Twin Disc, Incorporated is worth US$230m, and total annual CEO compensation is US$2.0m. (This figure is for the year to 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$500k. We looked at a group of companies with market capitalizations from US$100m to US$400m, and the median CEO compensation was US$906k.
It would therefore appear that Twin Disc, Incorporated pays John Batten 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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Twin Disc has changed from year to year.
Is Twin Disc, Incorporated Growing?
On average over the last three years, Twin Disc, Incorporated has grown earnings per share (EPS) by 98% each year (using a line of best fit). It achieved revenue growth of 46% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. It could be important to check this free visual depiction of what analysts expect for the future.
Has Twin Disc, Incorporated Been A Good Investment?
Boasting a total shareholder return of 101% over three years, Twin Disc, Incorporated has done well by shareholders. 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 the total CEO remuneration paid by Twin Disc, Incorporated, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Twin Disc (free visualization of insider trades).
Important note: Twin Disc may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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 firstname.lastname@example.org. 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.