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Todd Bluedorn became the CEO of Lennox International Inc. (NYSE:LII) in 2007. First, this article will compare CEO compensation with compensation at other large 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. This process should give us an idea about how appropriately the CEO is paid.
How Does Todd Bluedorn's Compensation Compare With Similar Sized Companies?
According to our data, Lennox International Inc. has a market capitalization of US$11b, and pays its CEO total annual compensation worth US$7.5m. (This is based on the year to December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.2m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Most shareholders would consider it a positive that Todd Bluedorn takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.
The graphic below shows how CEO compensation at Lennox International has changed from year to year.
Is Lennox International Inc. Growing?
Lennox International Inc. has increased its earnings per share (EPS) by an average of 20% a year, over the last three years (using a line of best fit). Its revenue is down -1.1% over last year.
This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Lennox International Inc. Been A Good Investment?
I think that the total shareholder return of 90%, over three years, would leave most Lennox International Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It appears that Lennox International Inc. remunerates its CEO below most large companies. Many would consider this to indicate that the pay is modest since the business is growing. The strong history of shareholder returns might even have some thinking that Todd Bluedorn deserves a raise!
It's not often we see shareholders do so well, and yet the CEO is paid modestly. It would be even more positive if company insiders are buying shares. So you may want to check if insiders are buying Lennox International shares with their own money (free access).
Important note: Lennox International 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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If you spot an error that warrants correction, please contact the editor at email@example.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.