In 2004 Vernon Nagel was appointed CEO of Acuity Brands, Inc. (NYSE:AYI). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Vernon Nagel's Compensation Compare With Similar Sized Companies?
Our data indicates that Acuity Brands, Inc. is worth US$5.4b, and total annual CEO compensation was reported as US$15m for the year to August 2019. That's a notable increase of 506% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$600k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$6.7m.
It would therefore appear that Acuity Brands, Inc. pays Vernon Nagel more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Acuity Brands has changed from year to year.
Is Acuity Brands, Inc. Growing?
On average over the last three years, Acuity Brands, Inc. has grown earnings per share (EPS) by 8.6% each year (using a line of best fit). In the last year, its revenue changed by just 0.2%.
I generally like to see a little revenue growth, but I'm happy with the EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Shareholders might be interested in this free visualization of analyst forecasts.
Has Acuity Brands, Inc. Been A Good Investment?
With a three year total loss of 41%, Acuity Brands, Inc. would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
We examined the amount Acuity Brands, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. This doesn't look great when you consider CEO remuneration is up on last year. Shareholders may wish to consider further research. Although we don't think the CEO pay is too high, it is probably more on the generous side of things. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Acuity Brands.
Important note: Acuity Brands may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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