U.S. Markets closed

Should You Worry About Nathan’s Famous, Inc.’s (NASDAQ:NATH) CEO Pay Cheque?

Lacy Summers

Want to participate in a short research study? Help shape the future of investing tools and receive a $20 prize!

In 2007 Eric Gatoff was appointed CEO of Nathan’s Famous, Inc. (NASDAQ:NATH). 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. 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.

Check out our latest analysis for Nathan’s Famous

How Does Eric Gatoff’s Compensation Compare With Similar Sized Companies?

According to our data, Nathan’s Famous, Inc. has a market capitalization of US$313m, and pays its CEO total annual compensation worth US$1.2m. (This is based on the year to 2018). While we always look at total compensation first, we note that the salary component is less, at US$500k. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO compensation of that group was US$1.5m.

So Eric Gatoff is paid around the average of the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.

The graphic below shows how CEO compensation at Nathan’s Famous has changed from year to year.

NasdaqGS:NATH CEO Compensation, February 21st 2019

Is Nathan’s Famous, Inc. Growing?

Over the last three years Nathan’s Famous, Inc. has grown its earnings per share (EPS) by an average of 14% per year (using a line of best fit). Its revenue is down -3.4% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important. Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Nathan’s Famous, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Nathan’s Famous, Inc. for providing a total return of 62% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

Remuneration for Eric Gatoff is close enough to the median pay for a CEO of a similar sized company .

The company is growing earnings per share and total shareholder returns have been pleasing. So one could argue the CEO compensation is quite modest, if you consider company performance! So you may want to check if insiders are buying Nathan’s Famous shares with their own money (free access).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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 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. Thank you for reading.