Is Scott Technology Limited (NZSE:SCT) Excessively Paying Its CEO?
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The CEO of Scott Technology Limited (NZSE:SCT) is Chris Hopkins. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
View our latest analysis for Scott Technology
How Does Chris Hopkins's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Scott Technology Limited has a market cap of NZ$192m, and is paying total annual CEO compensation of NZ$875k. (This number is for the twelve months until August 2018). We think total compensation is more important but we note that the CEO salary is lower, at NZ$377k. We took a group of companies with market capitalizations below NZ$303m, and calculated the median CEO total compensation to be NZ$27k.
Thus we can conclude that Chris Hopkins receives more in total compensation than the median of a group of companies in the same market, and of similar size to Scott Technology Limited. However, this doesn't necessarily mean the pay is too high. 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 Scott Technology has changed over time.
Is Scott Technology Limited Growing?
On average over the last three years, Scott Technology Limited has grown earnings per share (EPS) by 4.9% each year (using a line of best fit). In the last year, its revenue is up 57%.
It's great to see that revenue growth is strong. And in that context, the modest EPS improvement certainly isn't shabby. I'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Scott Technology Limited Been A Good Investment?
I think that the total shareholder return of 57%, over three years, would leave most Scott Technology Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
We examined the amount Scott Technology Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
While we generally prefer to see stronger EPS growth, there's no arguing with the strong returns to shareholders, over the last three years. As a result of the juicy return to investors, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if Scott Technology insiders are buying or selling shares.
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.
