How Does ABM Industries' (NYSE:ABM) CEO Pay Compare With Company Performance?
Scott Salmirs has been the CEO of ABM Industries Incorporated (NYSE:ABM) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for ABM Industries.
View our latest analysis for ABM Industries
How Does Total Compensation For Scott Salmirs Compare With Other Companies In The Industry?
At the time of writing, our data shows that ABM Industries Incorporated has a market capitalization of US$2.8b, and reported total annual CEO compensation of US$10m for the year to October 2020. We note that's an increase of 57% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$941k.
On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$4.1m. This suggests that Scott Salmirs is paid more than the median for the industry. Furthermore, Scott Salmirs directly owns US$4.0m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$941k | US$990k | 9% |
Other | US$9.2m | US$5.5m | 91% |
Total Compensation | US$10m | US$6.5m | 100% |
On an industry level, around 23% of total compensation represents salary and 77% is other remuneration. ABM Industries pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
ABM Industries Incorporated's Growth
Over the last three years, ABM Industries Incorporated has shrunk its earnings per share by 87% per year. It saw its revenue drop 7.9% over the last year.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has ABM Industries Incorporated Been A Good Investment?
ABM Industries Incorporated has served shareholders reasonably well, with a total return of 20% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
To Conclude...
As we noted earlier, ABM Industries pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Meanwhile, EPS has not been growing sufficiently to impress us, over the last three years. While shareholder returns are acceptable, they don't delight. So we think more research is needed, but we don't think the CEO is underpaid.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 4 warning signs for ABM Industries that you should be aware of before investing.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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