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What Can We Make Of Allegion's (NYSE:ALLE) CEO Compensation?

Simply Wall St
·3 mins read

Dave Petratis has been the CEO of Allegion plc (NYSE:ALLE) since 2013, 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 Allegion.

Check out our latest analysis for Allegion

How Does Total Compensation For Dave Petratis Compare With Other Companies In The Industry?

According to our data, Allegion plc has a market capitalization of US$9.6b, and paid its CEO total annual compensation worth US$8.6m over the year to December 2019. That's a notable increase of 13% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$987k.

In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$3.8m. Accordingly, our analysis reveals that Allegion plc pays Dave Petratis north of the industry median. Furthermore, Dave Petratis directly owns US$23m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

US$987k

US$950k

12%

Other

US$7.6m

US$6.6m

88%

Total Compensation

US$8.6m

US$7.6m

100%

Talking in terms of the industry, salary represented approximately 19% of total compensation out of all the companies we analyzed, while other remuneration made up 81% of the pie. In Allegion's case, non-salary compensation represents a greater slice of total remuneration, in comparison 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

Allegion plc's Growth

Over the past three years, Allegion plc has seen its earnings per share (EPS) grow by 5.6% per year. In the last year, its revenue is down 2.4%.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Allegion plc Been A Good Investment?

With a total shareholder return of 22% over three years, Allegion plc shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

As we touched on above, Allegion plc is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the business isn't growing EPS, and the returns to shareholders haven't been wonderful. We'd stop short of saying CEO pay is inappropriate, but we'd like to see healthier business growth from the company, moving forward.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Allegion that investors should be aware of in a dynamic business environment.

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.