Donald Barbour has been the CEO of Advanced Drainage Systems, Inc. (NYSE:WMS) since 2017, 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 Advanced Drainage Systems.
Comparing Advanced Drainage Systems, Inc.'s CEO Compensation With the industry
Our data indicates that Advanced Drainage Systems, Inc. has a market capitalization of US$4.7b, and total annual CEO compensation was reported as US$5.8m for the year to March 2020. That's a notable increase of 32% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$870k.
On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$4.9m. So it looks like Advanced Drainage Systems compensates Donald Barbour in line with the median for the industry. Moreover, Donald Barbour also holds US$8.3m worth of Advanced Drainage Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 18% of total compensation represents salary and 82% is other remuneration. In Advanced Drainage Systems' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Advanced Drainage Systems, Inc.'s Growth
Advanced Drainage Systems, Inc.'s earnings per share (EPS) grew 46% per year over the last three years. In the last year, its revenue is up 25%.
Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Advanced Drainage Systems, Inc. Been A Good Investment?
We think that the total shareholder return of 233%, over three years, would leave most Advanced Drainage Systems, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we noted earlier, Advanced Drainage Systems pays its CEO in line with similar-sized companies belonging to the same industry. Investors would surely be happy to see that returns have been great, and that EPS is up. Indeed, many might consider that Donald is compensated rather modestly, given the solid company performance! Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for Advanced Drainage Systems you should be aware of, and 1 of them is concerning.
Switching gears from Advanced Drainage Systems, 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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