Our Take On The New Home Company Inc.'s (NYSE:NWHM) CEO Salary
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In 2010 Larry Webb was appointed CEO of The New Home Company Inc. (NYSE:NWHM). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for New Home
How Does Larry Webb's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that The New Home Company Inc. has a market cap of US$91m, and is paying total annual CEO compensation of US$1.6m. (This number is for the twelve months until December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$692k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$462k.
It would therefore appear that The New Home Company Inc. pays Larry Webb more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at New Home has changed over time.
Is The New Home Company Inc. Growing?
Over the last three years The New Home Company Inc. has shrunk its earnings per share by an average of 55% per year (measured with a line of best fit). In the last year, its revenue is down -12%.
Unfortunately, earnings per share have trended lower over the last three years. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.
Has The New Home Company Inc. Been A Good Investment?
Since shareholders would have lost about 53% over three years, some The New Home Company Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
We compared total CEO remuneration at The New Home Company Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. This analysis suggests to us that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling New Home shares (free trial).
If you want to buy a stock that is better than New Home, this free list of high return, low debt companies is a great place to look.
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.
