David Little has been the CEO of DXP Enterprises, Inc. (NASDAQ:DXPE) since 1996. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does David Little's Compensation Compare With Similar Sized Companies?
According to our data, DXP Enterprises, Inc. has a market capitalization of US$250m, and paid its CEO total annual compensation worth US$2.8m over the year to December 2019. We note that's an increase of 34% above last year. While we always look at total compensation first, we note that the salary component is less, at US$638k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO total compensation of that group was US$1.4m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of DXP Enterprises. Talking in terms of the sector, salary represented approximately 22% of total compensation out of all the companies we analysed, while other remuneration made up 78% of the pie. So it seems like there isn't a significant difference between DXP Enterprises and the broader market, in terms of salary allocation in the overall compensation package.
It would therefore appear that DXP Enterprises, Inc. pays David Little 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. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. You can see a visual representation of the CEO compensation at DXP Enterprises, below.
Is DXP Enterprises, Inc. Growing?
DXP Enterprises, Inc. has seen earnings per share (EPS) move positively by an average of 42% a year, over the last three years (using a line of best fit). Its revenue is up 4.2% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.
Has DXP Enterprises, Inc. Been A Good Investment?
With a three year total loss of 60%, DXP Enterprises, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We compared the total CEO remuneration paid by DXP Enterprises, Inc., 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 we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. So shareholders might not feel great about the fact that CEO pay increased on last year. While EPS is moving in the right direction, we'd say shareholders would want better returns before the CEO is paid much more. Taking a breather from CEO compensation, we've spotted 3 warning signs for DXP Enterprises (of which 2 are concerning!) you should know about in order to have a holistic understanding of the 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 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.
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.