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Does Ingersoll-Rand Plc’s (NYSE:IR) CEO Salary Reflect Performance?

Simply Wall St

In 2010 Mike Lamach was appointed CEO of Ingersoll-Rand Plc (NYSE:IR). First, this article will compare CEO compensation with compensation at other large 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. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Ingersoll-Rand

How Does Mike Lamach’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Ingersoll-Rand Plc has a market cap of US$26b, and is paying total annual CEO compensation of US$19m. (This number is for the twelve months until December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.3m. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).

Thus we can conclude that Mike Lamach receives more in total compensation than the median of a group of large companies in the same market as Ingersoll-Rand Plc. However, this doesn’t necessarily mean the pay 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 a visual representation of the CEO compensation at Ingersoll-Rand, below.

NYSE:IR CEO Compensation, March 16th 2019

Is Ingersoll-Rand Plc Growing?

Ingersoll-Rand Plc has increased its earnings per share (EPS) by an average of 15% a year, over the last three years (using a line of best fit). Its revenue is up 10% over last year.

This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. It could be important to check this free visual depiction of what analysts expect for the future.

Has Ingersoll-Rand Plc Been A Good Investment?

Most shareholders would probably be pleased with Ingersoll-Rand Plc for providing a total return of 83% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

We examined the amount Ingersoll-Rand Plc pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Ingersoll-Rand (free visualization of insider trades).

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

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.

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. Thank you for reading.