Jack Cooney became the CEO of Somero Enterprises, Inc. (LON:SOM) in 1997, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Somero Enterprises pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Somero Enterprises, Inc.'s CEO Compensation With the industry
According to our data, Somero Enterprises, Inc. has a market capitalization of UK£174m, and paid its CEO total annual compensation worth US$580k over the year to December 2019. That's a notable decrease of 22% on last year. We note that the salary portion, which stands at US$464.4k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the same industry with market capitalizations ranging between UK£75m and UK£299m had a median total CEO compensation of US$513k. From this we gather that Jack Cooney is paid around the median for CEOs in the industry. Furthermore, Jack Cooney directly owns UK£1.9m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 48% of total compensation out of all the companies we analyzed, while other remuneration made up 52% of the pie. Somero Enterprises is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Somero Enterprises, Inc.'s Growth Numbers
Somero Enterprises, Inc.'s earnings per share (EPS) grew 3.1% per year over the last three years. It saw its revenue drop 2.8% over the last year.
We would prefer it if there was revenue growth, but the modest EPSgrowth gives us some relief. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Somero Enterprises, Inc. Been A Good Investment?
We think that the total shareholder return of 35%, over three years, would leave most Somero Enterprises, Inc. 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.
As we touched on above, Somero Enterprises, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the company has been found wanting in terms of EPS growth over the past three years. At the same time, shareholder returns have remained strong over the same period. So while shareholders shouldn't be overly concerned about CEO compensation, we suspect most would prefer to see improved performance, before a bump in pay.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Somero Enterprises that you should be aware of before investing.
Important note: Somero Enterprises is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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