Most Shareholders Will Probably Find That The CEO Compensation For Construction Partners, Inc. (NASDAQ:ROAD) Is Reasonable
Key Insights
Construction Partners to hold its Annual General Meeting on 20th of March
Total pay for CEO Jule Smith includes US$605.8k salary
The overall pay is comparable to the industry average
Construction Partners' total shareholder return over the past three years was 60% while its EPS grew by 9.1% over the past three years
CEO Jule Smith has done a decent job of delivering relatively good performance at Construction Partners, Inc. (NASDAQ:ROAD) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 20th of March. We present our case of why we think CEO compensation looks fair.
Check out our latest analysis for Construction Partners
Comparing Construction Partners, Inc.'s CEO Compensation With The Industry
At the time of writing, our data shows that Construction Partners, Inc. has a market capitalization of US$2.7b, and reported total annual CEO compensation of US$2.4m for the year to September 2023. That's just a smallish increase of 3.5% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$606k.
On examining similar-sized companies in the American Construction industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$3.1m. From this we gather that Jule Smith is paid around the median for CEOs in the industry. Moreover, Jule Smith also holds US$33m worth of Construction Partners stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$606k | US$571k | 25% |
Other | US$1.8m | US$1.8m | 75% |
Total Compensation | US$2.4m | US$2.4m | 100% |
On an industry level, roughly 22% of total compensation represents salary and 78% is other remuneration. According to our research, Construction Partners has allocated a higher percentage of pay to salary in comparison to the wider industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Construction Partners, Inc.'s Growth Numbers
Construction Partners, Inc. has seen its earnings per share (EPS) increase by 9.1% a year over the past three years. It achieved revenue growth of 19% over the last year.
We would argue that the modest growth in revenue is a notable positive. And the improvement in EPSis modest but respectable. Although we'll stop short of calling the stock a top performer, we think the company has potential. 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 Construction Partners, Inc. Been A Good Investment?
We think that the total shareholder return of 60%, over three years, would leave most Construction Partners, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Construction Partners that investors should be aware of in a dynamic business environment.
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.
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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.
