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Is D.R. Horton, Inc.'s (NYSE:DHI) CEO Salary Justified?

Simply Wall St

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David Auld became the CEO of D.R. Horton, Inc. (NYSE:DHI) in 2014. This analysis aims first to contrast CEO compensation with other large companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for D.R. Horton

How Does David Auld's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that D.R. Horton, Inc. has a market cap of US$17b, and is paying total annual CEO compensation of US$15m. (This figure is for the year to September 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$700k. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

It would therefore appear that D.R. Horton, Inc. pays David Auld more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at D.R. Horton has changed from year to year.

NYSE:DHI CEO Compensation, June 16th 2019

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). In the last year, its revenue is up 10%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. Shareholders might be interested in this free visualization of analyst forecasts.

Has D.R. Horton, Inc. Been A Good Investment?

Most shareholders would probably be pleased with D.R. Horton, Inc. for providing a total return of 54% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

We examined the amount D.R. Horton, Inc. pays its CEO, and compared it to the amount paid by other large companies. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. Shareholders may want to check for free if D.R. Horton insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.