David Auld became the CEO of D.R. Horton, Inc. (NYSE:DHI) in 2014. First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does David Auld's Compensation Compare With Similar Sized Companies?
Our data indicates that D.R. Horton, Inc. is worth US$23b, and total annual CEO compensation was reported as US$14m for the year to September 2019. That's below the compensation, last year. We think total compensation is more important but we note that the CEO salary is lower, at US$700k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
Thus we can conclude that David Auld receives more in total compensation than the median of a group of large companies in the same market as D.R. Horton, Inc.. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at D.R. Horton has changed over time.
Is D.R. Horton, Inc. Growing?
On average over the last three years, D.R. Horton, Inc. has grown earnings per share (EPS) by 23% each year (using a line of best fit). Its revenue is up 11% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has D.R. Horton, Inc. Been A Good Investment?
I think that the total shareholder return of 108%, over three years, would leave most D.R. Horton, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared total CEO remuneration at D.R. Horton, Inc. with the amount paid at other large companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at D.R. Horton.
Important note: D.R. Horton 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.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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. Thank you for reading.