Tom Hill became the CEO of Vulcan Materials Company (NYSE:VMC) in 2014, 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 Vulcan Materials pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Vulcan Materials Company's CEO Compensation With the industry
Our data indicates that Vulcan Materials Company has a market capitalization of US$19b, and total annual CEO compensation was reported as US$9.6m for the year to December 2019. We note that's an increase of 24% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$2.0m. Hence, we can conclude that Tom Hill is remunerated higher than the industry median. Moreover, Tom Hill also holds US$19m worth of Vulcan Materials 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 17% of total compensation represents salary, while the remainder of 83% is other remuneration. In Vulcan Materials' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Vulcan Materials Company's Growth
Vulcan Materials Company has seen its earnings per share (EPS) increase by 18% a year over the past three years. The trailing twelve months of revenue was pretty much the same as the prior period.
Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Vulcan Materials Company Been A Good Investment?
Vulcan Materials Company has generated a total shareholder return of 20% 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 we touched on above, Vulcan Materials Company is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the company has impressed us with its EPS growth, over three years. We also think investor returns are steady over the same time period. So, considering the EPS growth we do not wish to criticize CEO compensation, though we'd recommend further research on management.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Vulcan Materials that investors should think about before committing capital to this stock.
Switching gears from Vulcan Materials, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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