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What Can We Make Of Alamo Group's (NYSE:ALG) CEO Compensation?

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Simply Wall St
·3 min read
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This article will reflect on the compensation paid to Ron Robinson who has served as CEO of Alamo Group Inc. (NYSE:ALG) since 1999. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Alamo Group

How Does Total Compensation For Ron Robinson Compare With Other Companies In The Industry?

At the time of writing, our data shows that Alamo Group Inc. has a market capitalization of US$1.5b, and reported total annual CEO compensation of US$3.2m for the year to December 2019. Notably, that's an increase of 16% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$739k.

For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$4.5m. So it looks like Alamo Group compensates Ron Robinson in line with the median for the industry. Furthermore, Ron Robinson directly owns US$29m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

US$739k

US$695k

23%

Other

US$2.5m

US$2.1m

77%

Total Compensation

US$3.2m

US$2.8m

100%

On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. Alamo Group is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at Alamo Group Inc.'s Growth Numbers

Over the past three years, Alamo Group Inc. has seen its earnings per share (EPS) grow by 6.2% per year. It achieved revenue growth of 8.9% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Alamo Group Inc. Been A Good Investment?

With a total shareholder return of 16% over three years, Alamo Group Inc. shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

As we noted earlier, Alamo Group pays its CEO in line with similar-sized companies belonging to the same industry. However, EPS and total shareholder return are solid yet uninspiring. So, although the CEO compensation seems reasonable, shareholders might want to see some further progress before they agree that Ron should get a raise.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for Alamo Group that investors should think about before committing capital to this stock.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.