Dennis Knowles has been the CEO of Lumber Liquidators Holdings, Inc. (NYSE:LL) since 2016. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Dennis Knowles's Compensation Compare With Similar Sized Companies?
According to our data, Lumber Liquidators Holdings, Inc. has a market capitalization of US$267m, and paid its CEO total annual compensation worth US$2.3m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$716k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO total compensation of that group was US$1.2m.
Thus we can conclude that Dennis Knowles receives more in total compensation than the median of a group of companies in the same market, and of similar size to Lumber Liquidators Holdings, Inc.. However, this doesn't necessarily mean the pay 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 Lumber Liquidators Holdings has changed from year to year.
Is Lumber Liquidators Holdings, Inc. Growing?
On average over the last three years, Lumber Liquidators Holdings, Inc. has grown earnings per share (EPS) by 28% each year (using a line of best fit). It achieved revenue growth of 3.0% over the last year.
This demonstrates that the company has been improving recently. A good result. It's also good to see modest revenue growth, suggesting the underlying business is healthy. You might want to check this free visual report on analyst forecasts for future earnings.
Has Lumber Liquidators Holdings, Inc. Been A Good Investment?
With a three year total loss of 51%, Lumber Liquidators Holdings, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We examined the amount Lumber Liquidators Holdings, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Lumber Liquidators Holdings (free visualization of insider trades).
Important note: Lumber Liquidators Holdings 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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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.