Is Key Tronic Corporation's (NASDAQ:KTCC) CEO Pay Justified?
Craig Gates became the CEO of Key Tronic Corporation (NASDAQ:KTCC) in 2009. 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. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Key Tronic
How Does Craig Gates's Compensation Compare With Similar Sized Companies?
According to our data, Key Tronic Corporation has a market capitalization of US$64m, and paid its CEO total annual compensation worth US$686k over the year to June 2019. That's less than last year. We think total compensation is more important but we note that the CEO salary is lower, at US$620k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$503k.
It would therefore appear that Key Tronic Corporation pays Craig Gates 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 better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Key Tronic has changed from year to year.
Is Key Tronic Corporation Growing?
Key Tronic Corporation has reduced its earnings per share by an average of 106% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 4.0%.
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. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Key Tronic Corporation Been A Good Investment?
Given the total loss of 24% over three years, many shareholders in Key Tronic Corporation are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
We compared total CEO remuneration at Key Tronic Corporation 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. Over the same period, investors would have come away with nothing in the way of share price gains. Some might well form the view that the CEO is paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Key Tronic.
Important note: Key Tronic 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 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.
