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Is Beacon Roofing Supply, Inc.'s (NASDAQ:BECN) CEO Pay Justified?

Simply Wall St

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Paul Isabella became the CEO of Beacon Roofing Supply, Inc. (NASDAQ:BECN) in 2011. 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 process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Beacon Roofing Supply

How Does Paul Isabella's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Beacon Roofing Supply, Inc. has a market cap of US$2.4b, and is paying total annual CEO compensation of US$3.3m. (This is based on the year to September 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$837k. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$4.1m.

So Paul Isabella receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

The graphic below shows how CEO compensation at Beacon Roofing Supply has changed from year to year.

NasdaqGS:BECN CEO Compensation, June 10th 2019

Is Beacon Roofing Supply, Inc. Growing?

Beacon Roofing Supply, Inc. has reduced its earnings per share by an average of 29% a year, over the last three years (measured with a line of best fit). Its revenue is up 39% over last year.

The reduction in earnings per share, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. You might want to check this free visual report on analyst forecasts for future earnings.

Has Beacon Roofing Supply, Inc. Been A Good Investment?

Since shareholders would have lost about 18% over three years, some Beacon Roofing Supply, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Paul Isabella is paid around the same as most CEOs of similar size companies.

We would like to see somewhat stronger per share growth. And it's hard to argue that the returns over the last three years have delighted. So suffice it to say we don't think the compensation is modest. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Beacon Roofing Supply (free visualization of insider trades).

Important note: Beacon Roofing Supply may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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. Thank you for reading.