We believe the Matrix Service Company (NASDAQ: MTRX) CEO compensation package needs to be put under the microscope
Shareholders are unlikely to be too impressed with the disappointing results of Matrix service company (NASDAQ: MTRX) recently. At the next AGM on November 2, 2021, shareholders will be able to hear the board of directors, including their plans to turn around performance. It will also be an opportunity for them to challenge the board of directors on the direction of the company and to vote on resolutions such as executive compensation. Based on our analysis, we believe CEO compensation may need to be reviewed in light of recent performance.
Check out our latest review for Matrix Service
How does John Hewitt’s total compensation compare to that of other companies in the industry?
At the time of writing, our data shows that Matrix Service Company has a market capitalization of US $ 279 million and reported total annual CEO compensation of US $ 2.6 million for the year up to June 2021. This is largely stable compared to the compensation of the previous year. We think total compensation is more important, but our data shows the CEO salary is less, at US $ 726,000.
Comparing similar companies in the same industry with market caps ranging from $ 100 million to $ 400 million, we found that the median total CEO compensation was $ 1.4 million. As a result, our analysis reveals that Matrix Service Company pays John Hewitt north of the industry median. Additionally, John Hewitt owns $ 3.0 million in company stock in his own name, indicating that they have a lot of skin in the game.
|Making up||2021||2020||Proportion (2021)|
|Salary||US $ 726,000||US $ 800,000||28%|
|Other||US $ 1.9 million||1.7 million US dollars||72%|
|Total compensation||2.6 million US dollars||US $ 2.5 million||100%|
At the industry level, approximately 24% of total compensation is salary and 76% is other compensation. Interestingly, Matrix Service pays a larger portion of compensation through salary, compared to the industry. It is important to note that an inclination towards non-salary compensation suggests that total compensation is linked to the performance of the company.
A look at the growth figures of Matrix Service Company
Over the past three years, Matrix Service Company has reduced its earnings per share by 55% per year. He has seen his income drop 39% in the past year.
The decline in BPA is a bit worrying. And the fact that revenues are declining from year to year no doubt paints a deplorable picture. So given this relatively weak performance, shareholders probably wouldn’t want high CEO compensation. Going forward, you might want to check out this free visual report at analyst forecasts for the future profits of the company.
Was Matrix Service Company a Good Investment?
The -50% return over three years would not have pleased Matrix Service Company shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
Not only did the shareholders not see a favorable return on their investment, the business did not perform well either. Few shareholders would be willing to give the CEO a pay rise. At the next AGM, they can question management’s plans and strategies to turn around performance and reassess their investment thesis vis-à-vis the company.
So you might want to check if insiders are buying Matrix Service shares with their own money (free access).
Arguably, the quality of the company is much more important than the compensation levels of CEOs. So look at this free list of interesting companies that have a HIGH return on equity and low leverage.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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