Tom Hill has been the CEO of Vulcan Materials Company (NYSE:VMC) since 2014. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Tom Hill's Compensation Compare With Similar Sized Companies?
Our data indicates that Vulcan Materials Company is worth US$19b, and total annual CEO compensation was reported as US$7.7m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.1m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
So Tom Hill is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
The graphic below shows how CEO compensation at Vulcan Materials has changed from year to year.
Is Vulcan Materials Company Growing?
Over the last three years Vulcan Materials Company has grown its earnings per share (EPS) by an average of 14% per year (using a line of best fit). In the last year, its revenue is up 13%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Vulcan Materials Company Been A Good Investment?
With a total shareholder return of 19% over three years, Vulcan Materials Company shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
Remuneration for Tom Hill is close enough to the median pay for a CEO of a large company .
We would wish for better returns (whether dividends or capital gains) but we do admire the solid EPS growth on show here. As a result of these considerations, I would suggest the CEO pay is reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Vulcan Materials (free visualization of insider trades).
If you want to buy a stock that is better than Vulcan Materials, this free list of high return, low debt companies is a great place to look.
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