John Garrison became the CEO of Terex Corporation (NYSE:TEX) in 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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 method should give us information to assess how appropriately the company pays the CEO.
How Does John Garrison's Compensation Compare With Similar Sized Companies?
According to our data, Terex Corporation has a market capitalization of US$1.8b, and paid its CEO total annual compensation worth US$9.6m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$936k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$4.1m.
Thus we can conclude that John Garrison receives more in total compensation than the median of a group of companies in the same market, and of similar size to Terex Corporation. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Terex has changed over time.
Is Terex Corporation Growing?
On average over the last three years, Terex Corporation has grown earnings per share (EPS) by 50% each year (using a line of best fit). In the last year, its revenue is up 14%.
This demonstrates that the company has been improving recently. A good result. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Terex Corporation Been A Good Investment?
With a total shareholder return of 3.9% over three years, Terex Corporation has done okay by shareholders. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
We compared the total CEO remuneration paid by Terex Corporation, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. We also think investors are doing ok, over the same time period. While it may be worth researching further, we don't see a problem with the CEO pay, given the good EPS growth. Shareholders may want to check for free if Terex insiders are buying or selling shares.
Important note: Terex 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.
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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. Thank you for reading.