Jim Lines has been the CEO of Graham Corporation (NYSE:GHM) since 2008. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Jim Lines's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Graham Corporation has a market cap of US$198m, and reported total annual CEO compensation of US$1.2m for the year to March 2019. That's just a smallish increase of 4.2% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$435k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from US$100m to US$400m, and the median CEO total compensation was US$1.2m.
That means Jim Lines receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
You can see a visual representation of the CEO compensation at Graham, below.
Is Graham Corporation Growing?
Graham Corporation has reduced its earnings per share by an average of 54% a year, over the last three years (measured with a line of best fit). Its revenue is down 3.9% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Graham Corporation Been A Good Investment?
With a total shareholder return of 15% over three years, Graham Corporation shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
Jim Lines is paid around what is normal the leaders of comparable size companies.
The company isn't growing earnings per share, and nor have the total returns inspired us. We do not think the CEO pay is a problem, but we'd venture the company should look to improve its business metrics (and share price) before paying any more. So you may want to check if insiders are buying Graham shares with their own money (free access).
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.
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 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.