Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Mike Baur has been the CEO of ScanSource, Inc. (NASDAQ:SCSC) since 2000. First, this article will compare CEO compensation with compensation at similar sized companies. 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.
How Does Mike Baur's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that ScanSource, Inc. has a market cap of US$828m, and is paying total annual CEO compensation of US$4.5m. (This number is for the twelve months until June 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$875k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$2.7m.
It would therefore appear that ScanSource, Inc. pays Mike Baur 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.
You can see, below, how CEO compensation at ScanSource has changed over time.
Is ScanSource, Inc. Growing?
Over the last three years ScanSource, Inc. has shrunk its earnings per share by an average of 12% per year (measured with a line of best fit). Its revenue is up 3.6% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.
Has ScanSource, Inc. Been A Good Investment?
Given the total loss of 21% over three years, many shareholders in ScanSource, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at ScanSource, Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
Arguably worse, investors are without a positive return for the last three years. This analysis suggests to us that the CEO is paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling ScanSource (free visualization of insider trades).
Important note: ScanSource 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.