Ron Kramer became the CEO of Griffon Corporation (NYSE:GFF) in 2008. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Ron Kramer's Compensation Compare With Similar Sized Companies?
Our data indicates that Griffon Corporation is worth US$760m, and total annual CEO compensation was reported as US$12m 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$1.1m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from US$400m to US$1.6b, and discovered that the median CEO total compensation of that group was US$2.6m.
It would therefore appear that Griffon Corporation pays Ron Kramer more than the median CEO remuneration at companies of a similar size, 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.
You can see, below, how CEO compensation at Griffon has changed over time.
Is Griffon Corporation Growing?
Over the last three years Griffon Corporation has grown its earnings per share (EPS) by an average of 35% per year (using a line of best fit). In the last year, its revenue is up 9.6%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.
Has Griffon Corporation Been A Good Investment?
With a three year total loss of 21%, Griffon Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at Griffon Corporation with the amount paid at companies with a similar market capitalization. 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. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Griffon.
Important note: Griffon 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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