U.S. Markets closed

Is Quanex Building Products Corporation (NYSE:NX) Overpaying Its CEO?

Casey Hall

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

Bill Griffiths became the CEO of Quanex Building Products Corporation (NYSE:NX) in 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. 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.

See our latest analysis for Quanex Building Products

How Does Bill Griffiths’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Quanex Building Products Corporation has a market cap of US$545m, and is paying total annual CEO compensation of US$3.2m. (This number is for the twelve months until 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$815k. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO compensation of that group was US$1.5m.

Thus we can conclude that Bill Griffiths receives more in total compensation than the median of a group of companies in the same market, and of similar size to Quanex Building Products Corporation. 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 Quanex Building Products has changed from year to year.

NYSE:NX CEO Compensation February 12th 19

Is Quanex Building Products Corporation Growing?

Over the last three years Quanex Building Products Corporation has grown its earnings per share (EPS) by an average of 51% per year (using a line of best fit). It achieved revenue growth of 2.7% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. Shareholders might be interested in this free visualization of analyst forecasts.

Has Quanex Building Products Corporation Been A Good Investment?

With a total shareholder return of 2.7% over three years, Quanex Building Products Corporation has done okay by shareholders. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

We compared the total CEO remuneration paid by Quanex Building Products Corporation, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. Looking at the same time period, we think that the shareholder returns are respectable. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn’t call the CEO pay problematic. Shareholders may want to check for free if Quanex Building Products insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.