Bob Schottenstein became the CEO of M/I Homes, Inc. (NYSE:MHO) in 2004, 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 assess whether M/I Homes pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing M/I Homes, Inc.'s CEO Compensation With the industry
Our data indicates that M/I Homes, Inc. has a market capitalization of US$1.3b, and total annual CEO compensation was reported as US$5.3m for the year to December 2019. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at US$900k.
For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$5.3m. So it looks like M/I Homes compensates Bob Schottenstein in line with the median for the industry. Moreover, Bob Schottenstein also holds US$26m worth of M/I Homes stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 27% of total compensation represents salary, while the remainder of 73% is other remuneration. M/I Homes sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at M/I Homes, Inc.'s Growth Numbers
M/I Homes, Inc. has seen its earnings per share (EPS) increase by 36% a year over the past three years. In the last year, its revenue is up 16%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 M/I Homes, Inc. Been A Good Investment?
M/I Homes, Inc. has generated a total shareholder return of 27% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
As previously discussed, Bob is compensated close to the median for companies of its size, and which belong to the same industry. However, it's admirable that over the last three years, EPS growth for the company has been impressive, though the same can't be said for investor returns. So considering these factors, we think the compensation is probably quite reasonable, but investor returns need a boost moving forward.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for M/I Homes (1 can't be ignored!) that you should be aware of before investing here.
Important note: M/I Homes is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.
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