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Roper Technologies, Inc. (NYSE:ROP) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 14 June 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
How Does Total Compensation For Laurence Hunn Compare With Other Companies In The Industry?
Our data indicates that Roper Technologies, Inc. has a market capitalization of US$47b, and total annual CEO compensation was reported as US$19m for the year to December 2020. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$896k.
In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$19m. This suggests that Roper Technologies remunerates its CEO largely in line with the industry average. Moreover, Laurence Hunn also holds US$92m worth of Roper Technologies stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 8% of total compensation represents salary and 92% is other remuneration. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to Laurence Hunn as compared to non-salary compensation over the one-year period examined. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Roper Technologies, Inc.'s Growth Numbers
Over the last three years, Roper Technologies, Inc. has shrunk its earnings per share by 1.6% per year. It achieved revenue growth of 5.1% over the last year.
Its a bit disappointing to see that the company has failed to grow its EPS. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Roper Technologies, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Roper Technologies, Inc. for providing a total return of 59% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Roper Technologies prefers rewarding its CEO through non-salary benefits. Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which shouldn't be ignored) in Roper Technologies we think you should know about.
Important note: Roper Technologies is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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