Is Art's-Way Manufacturing Co., Inc.'s (NASDAQ:ARTW) CEO Paid At A Competitive Rate?

Simply Wall St
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Carrie Gunnerson became the CEO of Art's-Way Manufacturing Co., Inc. (NASDAQ:ARTW) in 2007. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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 process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Art's-Way Manufacturing

How Does Carrie Gunnerson's Compensation Compare With Similar Sized Companies?

According to our data, Art's-Way Manufacturing Co., Inc. has a market capitalization of US$9.4m, and paid its CEO total annual compensation worth US$199k over the year to November 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$172k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$523k.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at Art's-Way Manufacturing has changed from year to year.

NasdaqCM:ARTW CEO Compensation, February 25th 2020
NasdaqCM:ARTW CEO Compensation, February 25th 2020

Is Art's-Way Manufacturing Co., Inc. Growing?

On average over the last three years, Art's-Way Manufacturing Co., Inc. has shrunk earnings per share by 38% each year (measured with a line of best fit). It achieved revenue growth of 16% over the last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. 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 shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Art's-Way Manufacturing Co., Inc. Been A Good Investment?

Since shareholders would have lost about 46% over three years, some Art's-Way Manufacturing Co., Inc. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

It looks like Art's-Way Manufacturing Co., Inc. pays its CEO less than similar sized companies.

Carrie Gunnerson is paid less than CEOs of similar size companies, but the company isn't growing and total shareholder returns have been disappointing. While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. Shareholders may want to check for free if Art's-Way Manufacturing insiders are buying or selling shares.

If you want to buy a stock that is better than Art's-Way Manufacturing, this free list of high return, low debt companies is a great place to look.

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.

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.

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