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Does Applied Industrial Technologies, Inc.'s (NYSE:AIT) CEO Pay Compare Well With Peers?

Simply Wall St
·3 mins read

Neil Schrimsher became the CEO of Applied Industrial Technologies, Inc. (NYSE:AIT) in 2011. First, this article will compare CEO compensation with compensation at similar sized companies. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Applied Industrial Technologies

How Does Neil Schrimsher's Compensation Compare With Similar Sized Companies?

Our data indicates that Applied Industrial Technologies, Inc. is worth US$1.8b, and total annual CEO compensation was reported as US$4.5m for the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$900k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. 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$4.9m.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 22% of total compensation out of all the companies we analysed, while other remuneration made up 78% of the pie. Applied Industrial Technologies is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation

That means Neil Schrimsher receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance. The graphic below shows how CEO compensation at Applied Industrial Technologies has changed from year to year.

NYSE:AIT CEO Compensation April 17th 2020
NYSE:AIT CEO Compensation April 17th 2020

Is Applied Industrial Technologies, Inc. Growing?

Over the last three years Applied Industrial Technologies, Inc. has seen earnings per share (EPS) move in a positive direction by an average of 14% per year (using a line of best fit). In the last year, its revenue changed by just 0.8%.

This demonstrates that the company has been improving recently. A good result. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.

Has Applied Industrial Technologies, Inc. Been A Good Investment?

Given the total loss of 22% over three years, many shareholders in Applied Industrial Technologies, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Neil Schrimsher is paid around what is normal for the leaders of comparable size companies.

We think that the EPS growth is very pleasing, but we cannot say the same about the lacklustre shareholder returns (over the last three years). Considering the the positives we don't think the CEO pays is too high, but it's certainly hard to argue it is too low. Moving away from CEO compensation for the moment, we've identified 2 warning signs for Applied Industrial Technologies that you should be aware of before investing.

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

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.

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.