We Think ABM Industries Incorporated's (NYSE:ABM) CEO Compensation Looks Fair
Key Insights
ABM Industries will host its Annual General Meeting on 22nd of March
CEO Scott Salmirs' total compensation includes salary of US$1.00m
The overall pay is comparable to the industry average
ABM Industries' EPS grew by 11% over the past three years while total shareholder return over the past three years was 95%
It would be hard to discount the role that CEO Scott Salmirs has played in delivering the impressive results at ABM Industries Incorporated (NYSE:ABM) recently. Shareholders will have this at the front of their minds in the upcoming AGM on 22nd of March. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.
See our latest analysis for ABM Industries
Comparing ABM Industries Incorporated's CEO Compensation With The Industry
Our data indicates that ABM Industries Incorporated has a market capitalization of US$2.9b, and total annual CEO compensation was reported as US$8.3m for the year to October 2022. We note that's an increase of 10% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.
On examining similar-sized companies in the American Commercial Services industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$6.7m. So it looks like ABM Industries compensates Scott Salmirs in line with the median for the industry. Moreover, Scott Salmirs also holds US$17m worth of ABM Industries stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2022 | 2021 | Proportion (2022) |
Salary | US$1.0m | US$990k | 12% |
Other | US$7.3m | US$6.6m | 88% |
Total Compensation | US$8.3m | US$7.6m | 100% |
Speaking on an industry level, nearly 18% of total compensation represents salary, while the remainder of 82% is other remuneration. In ABM Industries' 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.
A Look at ABM Industries Incorporated's Growth Numbers
ABM Industries Incorporated's earnings per share (EPS) grew 11% per year over the last three years. Its revenue is up 18% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has ABM Industries Incorporated Been A Good Investment?
Most shareholders would probably be pleased with ABM Industries Incorporated for providing a total return of 95% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.
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 is a bit concerning) in ABM Industries we think you should know about.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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