Is American Superconductor Corporation (NASDAQ:AMSC) Excessively Paying Its CEO?
Dan McGahn has been the CEO of American Superconductor Corporation (NASDAQ:AMSC) since 2011. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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.
See our latest analysis for American Superconductor
How Does Dan McGahn's Compensation Compare With Similar Sized Companies?
Our data indicates that American Superconductor Corporation is worth US$131m, and total annual CEO compensation was reported as US$2.9m for the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$500k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$622k.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where American Superconductor stands. Speaking on an industry level, we can see that nearly 25% of total compensation represents salary, while the remainder of 75% is other remuneration. Non-salary compensation represents a greater slice of the remuneration pie for American Superconductor, in sharp contrast to the overall sector.
As you can see, Dan McGahn is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean American Superconductor Corporation is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see a visual representation of the CEO compensation at American Superconductor, below.
Is American Superconductor Corporation Growing?
American Superconductor Corporation has seen earnings per share (EPS) move positively by an average of 76% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 9.4%.
This demonstrates that the company has been improving recently. A good result. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.
Has American Superconductor Corporation Been A Good Investment?
Given the total loss of 17% over three years, many shareholders in American Superconductor Corporation are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
We examined the amount American Superconductor Corporation pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. On the other hand returns to investors over the same period have probably disappointed many. While EPS is moving in the right direction, we'd say shareholders would want better returns before the CEO is paid much more. On another note, we've spotted 3 warning signs for American Superconductor that investors should look into moving forward.
If you want to buy a stock that is better than American Superconductor, 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.
