What Can We Learn About Watsco's (NYSE:WSO) CEO Compensation?
Albert Nahmad has been the CEO of Watsco, Inc. (NYSE:WSO) since 1972, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Watsco pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Watsco
Comparing Watsco, Inc.'s CEO Compensation With the industry
According to our data, Watsco, Inc. has a market capitalization of US$8.2b, and paid its CEO total annual compensation worth US$11m over the year to December 2019. Notably, that's an increase of 57% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$580k.
In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$6.2m. Hence, we can conclude that Albert Nahmad is remunerated higher than the industry median. Furthermore, Albert Nahmad directly owns US$384m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$580k | US$658k | 5% |
Other | US$11m | US$6.5m | 95% |
Total Compensation | US$11m | US$7.1m | 100% |
Talking in terms of the industry, salary represented approximately 22% of total compensation out of all the companies we analyzed, while other remuneration made up 78% of the pie. Watsco pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Watsco, Inc.'s Growth Numbers
Watsco, Inc.'s earnings per share (EPS) grew 7.7% per year over the last three years. It achieved revenue growth of 6.0% over the last year.
We'd prefer higher revenue growth, but it is good to see modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. 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 Watsco, Inc. Been A Good Investment?
We think that the total shareholder return of 52%, over three years, would leave most Watsco, Inc. shareholders smiling. 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...
As we noted earlier, Watsco pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But shareholder returns have been positive for the last three years. That's why we were hoping EPS growth would match this growth, but sadly that is not the case. We'd ideally want to see higher EPS growth, but CEO compensation seems to be within reason, given high shareholder returns.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Watsco that investors should look into moving forward.
Switching gears from Watsco, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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