How Should Investors Feel About Northern Technologies International's (NASDAQ:NTIC) CEO Remuneration?
This article will reflect on the compensation paid to G. Lynch who has served as CEO of Northern Technologies International Corporation (NASDAQ:NTIC) since 2006. This analysis will also assess whether Northern Technologies International pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for Northern Technologies International
Comparing Northern Technologies International Corporation's CEO Compensation With the industry
Our data indicates that Northern Technologies International Corporation has a market capitalization of US$79m, and total annual CEO compensation was reported as US$873k for the year to August 2019. This means that the compensation hasn't changed much from last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$429k.
In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$379k. Hence, we can conclude that G. Lynch is remunerated higher than the industry median. Moreover, G. Lynch also holds US$646k worth of Northern Technologies International stock directly under their own name.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$429k | US$390k | 49% |
Other | US$444k | US$472k | 51% |
Total Compensation | US$873k | US$862k | 100% |
On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. Northern Technologies International pays out 49% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Northern Technologies International Corporation's Growth Numbers
Over the past three years, Northern Technologies International Corporation has seen its earnings per share (EPS) grow by 28% per year. It saw its revenue drop 10% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Northern Technologies International Corporation Been A Good Investment?
With a total shareholder return of 7.1% over three years, Northern Technologies International Corporation has done okay by shareholders. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
To Conclude...
As we noted earlier, Northern Technologies International pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, the EPS growth over three years is certainly impressive. We also note that, over the same time frame, shareholder returns haven't been bad. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't say CEO compensation problematic.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Northern Technologies International that investors should be aware of in a dynamic business environment.
Switching gears from Northern Technologies International, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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