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John Hall became the CEO of Mueller Water Products, Inc. (NYSE:MWA) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Mueller Water Products.
Comparing Mueller Water Products, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Mueller Water Products, Inc. has a market capitalization of US$1.9b, and reported total annual CEO compensation of US$4.3m for the year to September 2020. We note that's an increase of 43% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$778k.
For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$4.6m. From this we gather that John Hall is paid around the median for CEOs in the industry. What's more, John Hall holds US$2.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 17% of total compensation out of all the companies we analyzed, while other remuneration made up 83% of the pie. There isn't a significant difference between Mueller Water Products and the broader market, in terms of salary allocation in the overall compensation package. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Mueller Water Products, Inc.'s Growth
Mueller Water Products, Inc. has seen its earnings per share (EPS) increase by 10% a year over the past three years. In the last year, its revenue changed by just 0.4%.
This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. 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 Mueller Water Products, Inc. Been A Good Investment?
With a total shareholder return of 2.1% over three years, Mueller Water Products, Inc. has done okay by shareholders. 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.
As we touched on above, Mueller Water Products, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, it's admirable that over the last three years, EPS growth for the company has been impressive, though the same can't be said for investor returns. So considering these factors, we think the compensation is probably quite reasonable, but investor returns need a boost moving forward.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Mueller Water Products that investors should look into moving forward.
Important note: Mueller Water Products 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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