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Joe Raver became the CEO of Hillenbrand, Inc. (NYSE:HI) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Joe Raver Compare With Other Companies In The Industry?
According to our data, Hillenbrand, Inc. has a market capitalization of US$3.3b, and paid its CEO total annual compensation worth US$5.1m over the year to September 2020. That's a slightly lower by 7.5% over the previous year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$723k.
For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.6m. From this we gather that Joe Raver is paid around the median for CEOs in the industry. Moreover, Joe Raver also holds US$7.9m worth of Hillenbrand stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 17% of total compensation out of all the companies we analyzed, while other remuneration made up 83% of the pie. Hillenbrand 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.
Hillenbrand, Inc.'s Growth
Hillenbrand, Inc. has reduced its earnings per share by 49% a year over the last three years. In the last year, its revenue is up 39%.
The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Hillenbrand, Inc. Been A Good Investment?
With a total shareholder return of 2.8% over three years, Hillenbrand, Inc. 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.
As we noted earlier, Hillenbrand pays its CEO in line with similar-sized companies belonging to the same industry. But revenue growth over the last year can't be ignored. Meanwhile, we would have liked to see shareholder returns post more substantial growth. An additional worry is EPS , which has posted negative growth in the previous three years. But we don't think the CEO compensation is a problem, although shareholders might want to see more growth before agreeing that Joe should get a raise.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 4 warning signs for Hillenbrand (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.
Important note: Hillenbrand is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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