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What Can We Make Of Turning Point Brands' (NYSE:TPB) CEO Compensation?

Larry Wexler has been the CEO of Turning Point Brands, Inc. (NYSE:TPB) since 2009, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Turning Point Brands.

View our latest analysis for Turning Point Brands

Comparing Turning Point Brands, Inc.'s CEO Compensation With the industry

According to our data, Turning Point Brands, Inc. has a market capitalization of US$597m, and paid its CEO total annual compensation worth US$2.8m over the year to December 2019. Notably, that's an increase of 28% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$754k.

On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$1.7m. Accordingly, our analysis reveals that Turning Point Brands, Inc. pays Larry Wexler north of the industry median. Furthermore, Larry Wexler directly owns US$11m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

US$754k

US$750k

27%

Other

US$2.1m

US$1.5m

73%

Total Compensation

US$2.8m

US$2.2m

100%

On an industry level, roughly 31% of total compensation represents salary and 69% is other remuneration. Turning Point Brands pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

Turning Point Brands, Inc.'s Growth

Over the last three years, Turning Point Brands, Inc. has shrunk its earnings per share by 42% per year. It achieved revenue growth of 2.7% over the last year.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Turning Point Brands, Inc. Been A Good Investment?

Boasting a total shareholder return of 80% over three years, Turning Point Brands, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As previously discussed, Larry is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. We feel that EPS have been a bit disappointing, but it's nice to see positive shareholder returns over the last three years. So while we would not say that Larry is generously paid, stockholders would want to see some EPS growth before agreeing that a raise is a good idea.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 1 which doesn't sit too well with us) in Turning Point Brands we think you should know about.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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