What Can We Learn About EMCOR Group's (NYSE:EME) CEO Compensation?
Tony Guzzi became the CEO of EMCOR Group, Inc. (NYSE:EME) in 2011, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for EMCOR Group
Comparing EMCOR Group, Inc.'s CEO Compensation With the industry
Our data indicates that EMCOR Group, Inc. has a market capitalization of US$3.8b, and total annual CEO compensation was reported as US$11m for the year to December 2019. That's just a smallish increase of 5.8% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.
On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$6.9m. Accordingly, our analysis reveals that EMCOR Group, Inc. pays Tony Guzzi north of the industry median. What's more, Tony Guzzi holds US$25m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$1.2m | US$1.1m | 11% |
Other | US$9.5m | US$8.9m | 89% |
Total Compensation | US$11m | US$10m | 100% |
Talking in terms of the industry, salary represented approximately 21% of total compensation out of all the companies we analyzed, while other remuneration made up 79% of the pie. In EMCOR Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
EMCOR Group, Inc.'s Growth
Over the last three years, EMCOR Group, Inc. has shrunk its earnings per share by 5.4% per year. In the last year, its revenue is up 2.8%.
The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 EMCOR Group, Inc. Been A Good Investment?
With a three year total loss of 0.6% for the shareholders, EMCOR Group, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary...
As we noted earlier, EMCOR Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. To make matters worse, EPS growth has also been negative during this period. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 3 warning signs for EMCOR Group that investors should be aware of in a dynamic business environment.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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