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What We Learned About Graco's (NYSE:GGG) CEO Pay

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Simply Wall St
·3 min read
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This article will reflect on the compensation paid to Pat McHale who has served as CEO of Graco Inc. (NYSE:GGG) since 2007. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Graco.

View our latest analysis for Graco

How Does Total Compensation For Pat McHale Compare With Other Companies In The Industry?

At the time of writing, our data shows that Graco Inc. has a market capitalization of US$11b, and reported total annual CEO compensation of US$8.5m for the year to December 2019. That's a notable increase of 33% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$841k.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$8.3m. So it looks like Graco compensates Pat McHale in line with the median for the industry. Furthermore, Pat McHale directly owns US$14m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

US$841k

US$816k

10%

Other

US$7.7m

US$5.6m

90%

Total Compensation

US$8.5m

US$6.4m

100%

On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. Graco 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.

ceo-compensation
ceo-compensation

Graco Inc.'s Growth

Over the past three years, Graco Inc. has seen its earnings per share (EPS) grow by 39% per year. In the last year, its revenue is down 2.9%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Graco Inc. Been A Good Investment?

We think that the total shareholder return of 63%, over three years, would leave most Graco 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.

To Conclude...

As we noted earlier, Graco pays its CEO in line with similar-sized companies belonging to the same industry. The company is growing EPS and total shareholder returns have been pleasing. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.

Shareholders may want to check for free if Graco insiders are buying or selling shares.

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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.