The CEO of Titan Machinery Inc. (NASDAQ:TITN) is David Meyer, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Titan Machinery pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Titan Machinery Inc.'s CEO Compensation With the industry
According to our data, Titan Machinery Inc. has a market capitalization of US$271m, and paid its CEO total annual compensation worth US$483k over the year to January 2020. That is, the compensation was roughly the same as last year. Notably, the salary which is US$475.0k, represents most of the total compensation being paid.
For comparison, other companies in the same industry with market capitalizations ranging between US$100m and US$400m had a median total CEO compensation of US$1.0m. In other words, Titan Machinery pays its CEO lower than the industry median. Moreover, David Meyer also holds US$35m worth of Titan Machinery stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. Titan Machinery pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Titan Machinery Inc.'s Growth Numbers
Titan Machinery Inc. has seen its earnings per share (EPS) increase by 98% a year over the past three years. Its revenue is up 3.1% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Titan Machinery Inc. Been A Good Investment?
Since shareholders would have lost about 4.3% over three years, some Titan Machinery Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
Titan Machinery pays its CEO a majority of compensation through a salary. As previously discussed, David is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth over three years is certainly impressive. Considering EPS are on the up, we would say David is compensated fairly. But shareholders will likely want to hold off on any raise for David until investor returns are positive.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 2 warning signs for Titan Machinery (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.
Important note: Titan Machinery is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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