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Under the guidance of CEO Tom Hill, Vulcan Materials Company (NYSE:VMC) has performed reasonably well recently. As shareholders go into the upcoming AGM on 14 May 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.
How Does Total Compensation For Tom Hill Compare With Other Companies In The Industry?
Our data indicates that Vulcan Materials Company has a market capitalization of US$25b, and total annual CEO compensation was reported as US$9.9m for the year to December 2020. That's a fairly small increase of 3.4% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.2m.
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. Furthermore, Tom Hill directly owns US$29m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. Vulcan Materials pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Vulcan Materials Company's Growth Numbers
Over the past three years, Vulcan Materials Company has seen its earnings per share (EPS) grow by 4.5% per year. It saw its revenue drop 2.1% over the last year.
We would prefer it if there was revenue growth, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Vulcan Materials Company Been A Good Investment?
Most shareholders would probably be pleased with Vulcan Materials Company for providing a total return of 55% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Vulcan Materials that investors should look into moving forward.
Important note: Vulcan Materials 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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