It Looks Like The CEO Of Ferguson plc (NYSE:FERG) May Be Underpaid Compared To Peers
Key Insights
Ferguson will host its Annual General Meeting on 28th of November
Salary of US$1.19m is part of CEO Kevin Murphy's total remuneration
The overall pay is 45% below the industry average
Ferguson's EPS grew by 29% over the past three years while total shareholder return over the past three years was 64%
Shareholders will be pleased by the impressive results for Ferguson plc (NYSE:FERG) recently and CEO Kevin Murphy has played a key role. This would be kept in mind at the upcoming AGM on 28th of November which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.
Check out our latest analysis for Ferguson
How Does Total Compensation For Kevin Murphy Compare With Other Companies In The Industry?
At the time of writing, our data shows that Ferguson plc has a market capitalization of US$34b, and reported total annual CEO compensation of US$5.4m for the year to July 2023. That's a notable increase of 12% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.2m.
On comparing similar companies in the American Trade Distributors industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$10.0m. Accordingly, Ferguson pays its CEO under the industry median. Furthermore, Kevin Murphy directly owns US$21m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.2m | US$1.2m | 22% |
Other | US$4.2m | US$3.7m | 78% |
Total Compensation | US$5.4m | US$4.9m | 100% |
On an industry level, around 16% of total compensation represents salary and 84% is other remuneration. Ferguson pays out 22% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Ferguson plc's Growth Numbers
Ferguson plc has seen its earnings per share (EPS) increase by 29% a year over the past three years. In the last year, its revenue is up 4.1%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Ferguson plc Been A Good Investment?
Most shareholders would probably be pleased with Ferguson plc for providing a total return of 64% over three years. 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...
Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 3 warning signs for Ferguson that investors should look into moving forward.
Switching gears from Ferguson, 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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
