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Is LGI Homes, Inc. (NASDAQ:LGIH) Overpaying Its CEO?

Simply Wall St

Eric Lipar became the CEO of LGI Homes, Inc. (NASDAQ:LGIH) in 2009. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for LGI Homes

How Does Eric Lipar's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that LGI Homes, Inc. has a market cap of US$1.7b, and is paying total annual CEO compensation of US$4.2m. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$825k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.1m.

So Eric Lipar receives a similar amount to the median CEO pay, amongst 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.

You can see a visual representation of the CEO compensation at LGI Homes, below.

NasdaqGS:LGIH CEO Compensation, August 18th 2019

Is LGI Homes, Inc. Growing?

LGI Homes, Inc. has increased its earnings per share (EPS) by an average of 27% a year, over the last three years (using a line of best fit). It achieved revenue growth of 5.8% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.

Has LGI Homes, Inc. Been A Good Investment?

Boasting a total shareholder return of 120% over three years, LGI Homes, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Remuneration for Eric Lipar is close enough to the median pay for a CEO of a similar sized company .

The company is growing earnings per share and total shareholder returns have been pleasing. So one could argue the CEO compensation is quite modest, if you consider company performance! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling LGI Homes (free visualization of insider trades).

If you want to buy a stock that is better than LGI Homes, this free list of high return, low debt companies is a great place to look.

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.