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Is Argan, Inc.’s (NYSE:AGX) CEO Overpaid Relative To Its Peers?

Felix Olson

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Rainer Bosselmann became the CEO of Argan, Inc. (NYSE:AGX) in 2003. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Argan

How Does Rainer Bosselmann’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Argan, Inc. has a market cap of US$737m, and is paying total annual CEO compensation of US$1.3m. (This figure is for the year to 2018). While we always look at total compensation first, we note that the salary component is less, at US$225k. We looked at a group of companies with market capitalizations from US$400m to US$1.6b, and the median CEO compensation was US$2.2m.

A first glance this seems like a real positive for shareholders, since Rainer Bosselmann is paid less than the average compensation paid by similar sized companies. Though positive, it’s important we delve into the performance of the actual business.

You can see a visual representation of the CEO compensation at Argan, below.

NYSE:AGX CEO Compensation, February 19th 2019

Is Argan, Inc. Growing?

Over the last three years Argan, Inc. has grown its earnings per share (EPS) by an average of 13% per year (using a line of best fit). Its revenue is down -39% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.

Has Argan, Inc. Been A Good Investment?

I think that the total shareholder return of 62%, over three years, would leave most Argan, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

It appears that Argan, Inc. remunerates its CEO below most similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. The strong history of shareholder returns might even have some thinking that Rainer Bosselmann deserves a raise!

Most shareholders like to see a modestly paid CEO combined with strong performance by the company. It would be even more positive if company insiders are buying shares. Whatever your view on compensation, you might want to check if insiders are buying or selling Argan shares (free trial).

If you want to buy a stock that is better than Argan, this free list of high return, low debt companies is a great place to look.

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.

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. On rare occasion, data errors may occur. Thank you for reading.