Chris Pappas has been the CEO of Luby's, Inc. (NYSE:LUB) since 2001. 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Chris Pappas's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Luby's, Inc. has a market cap of US$42m, and is paying total annual CEO compensation of US$784k. (This figure is for the year to August 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$500k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$423k.
As you can see, Chris Pappas is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Luby's, Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Luby's has changed over time.
Is Luby's, Inc. Growing?
Over the last three years Luby's, Inc. has shrunk its earnings per share by an average of 62% per year (measured with a line of best fit). It saw its revenue drop -5.5% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Luby's, Inc. Been A Good Investment?
With a three year total loss of 72%, Luby's, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at Luby's, Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. In our opinion the CEO might be paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Luby's (free visualization of insider trades).
Important note: Luby's 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 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. Thank you for reading.