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Is Mohawk Industries Inc’s (NYSE:MHK) CEO Being Overpaid?

Jeff Lorberbaum has been the CEO of Mohawk Industries Inc (NYSE:MHK) since 2001. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. 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.

Check out our latest analysis for Mohawk Industries

How Does Jeff Lorberbaum’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Mohawk Industries Inc has a market cap of US$9.5b, and is paying total annual CEO compensation of US$5.0m. (This number is for the twelve months until 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.2m. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO compensation of that group was US$6.9m.

So Jeff Lorberbaum 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, below, how CEO compensation at Mohawk Industries has changed over time.

NYSE:MHK CEO Compensation December 1st 18
NYSE:MHK CEO Compensation December 1st 18

Is Mohawk Industries Inc Growing?

Over the last three years Mohawk Industries Inc has grown its earnings per share (EPS) by an average of 12% per year. Its revenue is up 6.5% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably.

Shareholders might be interested in this free visualization of analyst forecasts. .

Has Mohawk Industries Inc Been A Good Investment?

Given the total loss of 33% over three years, many shareholders in Mohawk Industries Inc are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

Jeff Lorberbaum is paid around what is normal the leaders of comparable size companies.

We think that the EPS growth is very pleasing, but it’s disappointing to see negative shareholder returns over three years. We’d be surprised if shareholders want to see a pay rise for the CEO, but we’d stop short of calling their pay too generous. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Mohawk Industries.

Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

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