Does Taylor Morrison Home Corporation's (NYSE:TMHC) CEO Salary Reflect Performance?
In 2012 Sheryl Palmer was appointed CEO of Taylor Morrison Home Corporation (NYSE:TMHC). 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. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for Taylor Morrison Home
How Does Sheryl Palmer's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Taylor Morrison Home Corporation has a market cap of US$2.8b, and reported total annual CEO compensation of US$6.8m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.1m.
Thus we can conclude that Sheryl Palmer receives more in total compensation than the median of a group of companies in the same market, and of similar size to Taylor Morrison Home Corporation. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Taylor Morrison Home has changed from year to year.
Is Taylor Morrison Home Corporation Growing?
Taylor Morrison Home Corporation has increased its earnings per share (EPS) by an average of 8.7% a year, over the last three years (using a line of best fit). It achieved revenue growth of 19% over the last year.
I think the revenue growth is good. And the modest growth in earnings per share isn't bad, either. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. It could be important to check this free visual depiction of what analysts expect for the future.
Has Taylor Morrison Home Corporation Been A Good Investment?
I think that the total shareholder return of 52%, over three years, would leave most Taylor Morrison Home Corporation shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
We compared the total CEO remuneration paid by Taylor Morrison Home Corporation, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
While we generally prefer to see stronger EPS growth, there's no arguing with the strong returns to shareholders, over the last three years. As a result of the juicy return to investors, the CEO remuneration may well be quite reasonable. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Taylor Morrison Home.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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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.
