E. Chestnut has been the CEO of Crown Crafts, Inc. (NASDAQ:CRWS) since 2001, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For E. Chestnut Compare With Other Companies In The Industry?
According to our data, Crown Crafts, Inc. has a market capitalization of US$60m, and paid its CEO total annual compensation worth US$903k over the year to March 2020. Notably, that's an increase of 13% over the year before. Notably, the salary which is US$461.3k, represents most of the total compensation being paid.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$513k. Hence, we can conclude that E. Chestnut is remunerated higher than the industry median. What's more, E. Chestnut holds US$4.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 30% of total compensation represents salary and 70% is other remuneration. Crown Crafts pays out 51% of remuneration in the form of a salary, significantly higher than the industry average. 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 Crown Crafts, Inc.'s Growth Numbers
Crown Crafts, Inc.'s earnings per share (EPS) grew 9.8% per year over the last three years. It saw its revenue drop 4.2% over the last year.
We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Crown Crafts, Inc. Been A Good Investment?
Crown Crafts, Inc. has served shareholders reasonably well, with a total return of 15% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As previously discussed, E. is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company lacks EPS growth, and returns to shareholders are less than stellar, over the last three years. Overall, although the company has delivered steady performance, we would like to see an improvement in key metrics before we can say the high CEO compensation is justified.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which is a bit concerning) in Crown Crafts we think you should know about.
Important note: Crown Crafts 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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