Dave Petratis has been the CEO of Allegion plc (NYSE:ALLE) since 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Dave Petratis's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Allegion plc has a market cap of US$9.6b, and reported total annual CEO compensation of US$7.6m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$950k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their 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).
Most shareholders would consider it a positive that Dave Petratis 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 Allegion has changed from year to year.
Is Allegion plc Growing?
Over the last three years Allegion plc has grown its earnings per share (EPS) by an average of 26% per year (using a line of best fit). In the last year, its revenue is up 9.8%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.
Has Allegion plc Been A Good Investment?
Boasting a total shareholder return of 59% over three years, Allegion plc has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
It appears that Allegion plc remunerates its CEO below most large companies.
Since the business is growing, many would argue this suggests the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Dave Petratis 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. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Allegion (free visualization of insider trades).
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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