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How Should Investors React To The Home Depot, Inc.'s (NYSE:HD) CEO Pay?

Simply Wall St

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Craig Menear became the CEO of The Home Depot, Inc. (NYSE:HD) in 2014. First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. 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.

Check out our latest analysis for Home Depot

How Does Craig Menear's Compensation Compare With Similar Sized Companies?

Our data indicates that The Home Depot, Inc. is worth US$226b, and total annual CEO compensation is US$11m. (This figure is for the year to February 2019). That's actually a decrease on the year before. We think total compensation is more important but we note that the CEO salary is lower, at US$1.3m. 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. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

So Craig Menear is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

The graphic below shows how CEO compensation at Home Depot has changed from year to year.

NYSE:HD CEO Compensation, June 16th 2019

Is The Home Depot, Inc. Growing?

On average over the last three years, The Home Depot, Inc. has grown earnings per share (EPS) by 19% each year (using a line of best fit). It achieved revenue growth of 7.4% over the last year.

This demonstrates that the company has been improving recently. A good result. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. You might want to check this free visual report on analyst forecasts for future earnings.

Has The Home Depot, Inc. Been A Good Investment?

Boasting a total shareholder return of 74% over three years, The Home Depot, Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Remuneration for Craig Menear is close enough to the median pay for a CEO of a large company .

Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. Whatever your view on compensation, you might want to check if insiders are buying or selling Home Depot shares (free trial).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.