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Our View On Argan's (NYSE:AGX) CEO Pay

Rainer Bosselmann has been the CEO of Argan, Inc. (NYSE:AGX) since 2003, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Argan

How Does Total Compensation For Rainer Bosselmann Compare With Other Companies In The Industry?

Our data indicates that Argan, Inc. has a market capitalization of US$768m, and total annual CEO compensation was reported as US$1.3m for the year to January 2020. Notably, that's an increase of 18% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$225k.

On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$2.3m. That is to say, Rainer Bosselmann is paid under the industry median. What's more, Rainer Bosselmann holds US$16m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2020

2019

Proportion (2020)

Salary

US$225k

US$225k

17%

Other

US$1.1m

US$908k

83%

Total Compensation

US$1.3m

US$1.1m

100%

Talking in terms of the industry, salary represented approximately 21% of total compensation out of all the companies we analyzed, while other remuneration made up 79% of the pie. Argan pays a modest slice of remuneration through salary, as compared 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.

ceo-compensation
ceo-compensation

Argan, Inc.'s Growth

Argan, Inc. has reduced its earnings per share by 56% a year over the last three years. In the last year, its revenue is up 33%.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is 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 Argan, Inc. Been A Good Investment?

Argan, Inc. has served shareholders reasonably well, with a total return of 28% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As previously discussed, Rainer is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. And revenue growth for the company is showing some positive trends.And revenues are growing at a healthy clip.And revenues are increasing at a good pace over the past year. But we were hoping for higher shareholder returns and positive EPS growth during this stretch, which, unfortunately, did not materialize. We won't say CEO compensation is inappropriate, but shareholders will likely want to see healthier returns before they agree the company deserves a raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Argan that investors should think about before committing capital to this stock.

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

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

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