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Why Chicago Rivet & Machine Co.'s (NYSEMKT:CVR) CEO Pay Matters To You

In 1981 John Morrissey was appointed CEO of Chicago Rivet & Machine Co. (NYSEMKT:CVR). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Chicago Rivet & Machine

How Does John Morrissey's Compensation Compare With Similar Sized Companies?

According to our data, Chicago Rivet & Machine Co. has a market capitalization of US$18m, and paid its CEO total annual compensation worth US$403k over the year to December 2019. That's actually a decrease on the year before. We think total compensation is more important but we note that the CEO salary is lower, at US$333k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$619k.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Chicago Rivet & Machine stands. Speaking on an industry level, we can see that nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. It's interesting to note that Chicago Rivet & Machine pays out a greater portion of remuneration through salary, in comparison to the wider industry.

Most shareholders would consider it a positive that John Morrissey takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business. The graphic below shows how CEO compensation at Chicago Rivet & Machine has changed from year to year.

AMEX:CVR CEO Compensation April 4th 2020
AMEX:CVR CEO Compensation April 4th 2020

Is Chicago Rivet & Machine Co. Growing?

Chicago Rivet & Machine Co. has reduced its earnings per share by an average of 24% a year, over the last three years (measured with a line of best fit). Its revenue is down 12% over last year.

Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Chicago Rivet & Machine Co. Been A Good Investment?

With a three year total loss of 47%, Chicago Rivet & Machine Co. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

It appears that Chicago Rivet & Machine Co. remunerates its CEO below most similar sized companies.

Shareholders should note that compensation for John Morrissey is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. Taking a breather from CEO compensation, we've spotted 4 warning signs for Chicago Rivet & Machine (of which 1 doesn't sit too well with us!) you should know about in order to have a holistic understanding of the stock.

If you want to buy a stock that is better than Chicago Rivet & Machine, 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.